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THE ARCH FUND, INC.
MESSAGE FROM YOUR CHAIRMAN
Dear Shareholders:
We are pleased to present this report for The ARCH Fund, Inc. for the year
ended November 30, 1995. 1995 proved to be a record-setting year for the
financial markets with the Dow Jones Industrial Average topping 4000 and
breaking 5000 before year end. The ARCH Family of Mutual Funds also
experienced a tremendous degree of growth in 1995 with assets climbing to over
$2 billion.
PORTFOLIO REVIEW AND OUTLOOK
In the following letter, prepared by John H. Blixen, President of
Mississippi Valley Advisors Inc. (MVA), the Fund's investment adviser, you
will find a detailed discussion of the performance of each Portfolio of The
ARCH Fund, Inc. The portfolio-specific reports describe factors that
contributed to the Portfolios' returns for the period ended November 30, 1995.
To fully understand the performance of your investment in The ARCH Mutual
Funds, I urge you to read this report closely.
MESSAGE FROM MISSISSIPPI VALLEY ADVISORS INC.--YOUR INVESTMENT ADVISER
We believe that the chances of an actual recession in 1996 are small,
although growth will be below trend and the risks of a recession are certainly
on the downside. We assign a small probability to this risk because we expect
further interest rate reductions soon, and believe that if the Federal Reserve
waits longer, the cuts are likely to be larger. Additionally, we expect that
the export sector is likely to provide critical support to the economy in
1996.
Better foreign sales will be needed to busy the economy if our expectation
that consumer spending will underperform in coming quarters is accurate. The
consumer savings rate is already very low, there is no pent-up demand to be
activated, and the financial health of households appears to be on the
decline. The ratio of debt to income, the ratio of debt service to income, and
delinquency rates, which had improved over the last several years have now
reversed and are signaling increased financial strains. These strains have not
proceeded to the point of a major retrenchment that would raise concern about
an impending recession, but will likely contribute to slower growth in
consumer spending immediately ahead.
Further, we expect that the balances between business investment and exports
will have much to do with the strength in 1996. We project a slowing in
business investment, offset by a rebound in exports. If business investment
were to remain as strong as in 1995 and net exports were to rebound as well,
the prospect for growth at or above trend (2.5%) in 1996 would be increased.
There are two important economic conditions currently boosting the stock and
bond markets. The first is the continuation of a long period of declining
inflation. Productivity growth has been very strong, and this "productivity
bonanza" is likely contributing to the improvement in the inflation rate. This
is a return to a lower and more stable inflation environment, comparable to
the mid-1960s.
A continuing decline in the budget deficit, the second economic condition
should initially lower demand, reinforcing the bias toward below-trend growth
over the short term. The somewhat weaker economy that results
THE ARCH FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL
AGENCY, ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, THE DISTRIBUTOR, OR ANY OF THEIR AFFILIATES; AND INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
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in the near term will, in addition, have a legacy in a further decline in the
underlying rate of inflation, reinforcing and extending the decline in
inflation.
But, the major effect of further significant deficit reduction will show up
in the long term, in the form of higher national savings, increased capital
formation, a higher level of productive capacity, and hence a higher rate of
economic growth, and an improved trade balance.
This background of low inflation, falling interest rates, modest growth, and
still-rising profits is truly "heaven" for stocks. Thus, despite a record high
stock market, values still seem available with long term potential for those
who can ride out the inevitable corrections which will take place from these
levels.
On a cautionary note, however, investors should be sure not to buy long term
stocks and bonds with money which may be needed in one to two years. Being
forced to sell at the bottom of a correction can be very painful. Reserves can
be kept in money market funds or short to intermediate term bond funds.
THE ARCH MONEY MARKET PORTFOLIO AND THE ARCH TREASURY MONEY MARKET PORTFOLIO
The ARCH Money Market Portfolio seeks current income with liquidity and
stability of principal. The Portfolio's total net assets at November 30, 1995
were approximately $776 million. In anticipation of additional easing by the
Federal Reserve, the Portfolio will be targeting an average maturity in the
40-day area. As of November 30, commercial paper holdings comprised the
largest percentage of the Portfolio, with floating rate and medium-
term/corporate notes comprising the balance.
The ARCH Treasury Money Market Portfolio seeks a high level of current
income exempt from state income tax consistent with liquidity and stability of
principal. The Portfolio increased its total net assets to over $255 million
by November 30, 1995. The average maturity of the Portfolio has ranged in the
upper-40 to low-50 day area. The Portfolio will continue to target this
maturity range over the near term. The composition of the Portfolio on
November 30, 1995 was 88% treasury bills and 12% treasury notes with
maturities laddered through the end of February. The Portfolio's composition
is subject to change.
The two taxable money market portfolios are managed by Jo Ann Dotson, a
Senior Associate, who has more than 21 years of investment management
experience. Ms. Dotson has been with MVA since 1973.
THE ARCH TAX-EXEMPT MONEY MARKET PORTFOLIO
The ARCH Tax-Exempt Money Market Portfolio seeks a high level of current
income exempt from federal income tax as is consistent with liquidity and
stability of principal. The Portfolio attempts to achieve this objective,
while maintaining extremely strict credit quality standards.
The Portfolio performed better at year-end 1995 when variable rate security
yields were higher. However, with interest rates on variable rate securities
close to all time lows, we are now investing a larger percentage of the
Portfolio's assets in tax-exempt commercial paper. This will allow us to
extend the maturity of the Portfolio to our desired range and should help
increase the yield of the Portfolio.
Prior to October 2, 1995, the Portfolio was an investment portfolio of The
ARCH Tax-Exempt Trust. The financial history of the Portfolio since its
inception with the Trust is included in this Annual Report.
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THE ARCH SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
The graph that appears on page 3 of the ARCH Funds annual report represents a
comparison between a $10,000 investment made on July 10, 1995 in The ARCH
Short-Intermediate Municipal Portfolio in the following classes of shares:
Trust, Investor A (No Load), Investor A (Load) as compared to the Lehman
Municipal Bond Index-3-year. The chart indicates that $10,000 invested on
July 10, 1995, in Trust Shares would have been worth $10,213, in Investor A (No
Load) it would have been worth $10,080 and in Investor A (Load) would have been
worth $9,825 on November 30, 1995 as opposed to $10,220 had the money been
invested in the Lehman Municipal Bond Index-3 year.
The table that appears on page 3 indicates that The ARCH Short-Intermediate
Municipal Portfolio Trust Shares had a aggregate total return of 2.15% as of
11/30/95 and 2.58% as of 12/31/95. The Portfolio's Investor A (Load) Shares had
an aggregate total return of -1.75% as of 11/30/95 and -1.35% as of 12/31/95.
The Portfolio's Investor A (No Load) Shares had an aggregate total return of
0.80% as of 11/30/95 and 1.22% as of 12/31/95.
Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
The ARCH Short-Intermediate Municipal Portfolio is measured against the
Lehman Bros. Municipal Bond Index-3 year, an unmanaged index generally
representative of the total return of municipal bonds. It does not reflect
the deduction of expenses associated with a mutual fund, such as sales
charges, investment management and fund accounting fees. The performance
of the Portfolio shown on the graph reflects the deduction of these value-
added services, as well as the deduction of a 2.5% sales charge on
Investor A Shares. Investors are unable to purchase the index directly,
although they can invest in the underlying securities.
The ARCH Short-Intermediate Municipal Portfolio seeks as high a level of
current income, exempt from Federal income tax as is consistent with the
preservation of capital. The Portfolio's average maturity will be between two
and five years.
The Portfolio commenced operations on July 10, 1995. We believe the one to
five year area of the municipal market appears to be attractive given the
decline in interest rates. We have structured the portfolio currently with a
five-year average maturity focusing on high quality issues. The ARCH Short-
Intermediate Municipal Portfolio's Trust shares had a total return of 2.15%
for the year ended November 30, 1995, holding pace with its benchmark, the
Lehman Municipal Bond Index-3 year.
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THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO
The graph that appears on page 4 of the ARCH Funds annual report represents a
comparison between a $10,000 investment made on July 15, 1998 in The ARCH
Missouri Tax-Exempt Bond Portfolio in the following classes of shares: Trust,
Investor A (No Load), Investor A (Load), Investor B (No CDSC) and Investor B
(CDSC) as compared to the Lehman Brothers Municipal Bond Index. The chart
indicates that $10,000 invested on July 15, 1988, in Trust Shares would have
been worth $18,430, in Investor A (No Load) it would have been worth $18,221, in
Investor A (Load) would have been worth $17,403, in Investor B (No CDSC) it
would have been worth $18,007 and in Investor B (CDSC) it would have been worth
$18,007 on November 30, 1995 as opposed to $21,087 had the money been invested
in the Lehman Brothers Municipal Bond Index.
The table that appears on page 4 indicates that The ARCH Missouri Tax-Exempt
Bond Portfolio Trust Shares had a one-year average annual total return of 18.64%
and a since inception (7/15/88) average annual total return of 8.64% as of
11/30/95. For the period ended 12/31/95, the Portfolio's Trust Shares had a one
year average annual total return of 17.03% and since inception of 8.68%. The
Portfolio's Investor A (Load) Shares had a one-year average annual total return
of 13.09% and since inception (7/15/88) of 7.80% as of 11/30/95. For the period
ended 12/31/95, the Portfolio's Investor A (Load) Shares had a one-year average
annual total return of 11.64% and since inception of 7.86%. The Portfolio's
Investor A (No Load) Shares had a one-year average annual total return of 18.42%
and since inception (7/15/88) of 8.47% as of 11/30/95. For the period ended
12/31/95, the Portfolio's Investor A (No Load) Shares had a one-year average
annual total return of 16.91% and since inception of 8.52%. The Portfolio's
Investor B (CDSC) Shares had a one-year average annual total return of 12.60%
and since inception (7/15/88) of 8.29% as of 11/30/95. For the period ended
12/31/95, the Portfolio's Investor B (CDSC) Shares had a one-year average annual
total return of 11.03% and since inception of 8.43%. The Portfolio's Investor B
(No CDSC) Shares had a one-year average annual total return of 17.60% and since
inception (7/15/88) of 8.29% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (No CDSC) Shares had a one-year average annual total
return of 16.03% and since inception of 8.34%.
Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio which has been restated
to reflect the contingent deferred sales charges payable by holders of
Investor B shares that redeem within six years of the date of purchase.
Investor B shares are also subject to distribution and services fees at a
maximum annual rate of 1.00%. Had those distribution and services fees
been reflected, performance would have been reduced.
The ARCH Missouri Tax-Exempt Bond Portfolio is measured against the Lehman
Bros. Municipal Bond Index, an unmanaged index generally representative of
the total return of municipal bonds. It does not reflect the deduction of
expenses associated with a mutual fund, such as sales charges, investment
management and fund accounting fees. The performance of the Portfolio
shown on the graph reflects the deduction of these value-added services,
as well as the deduction of a 4.5% sales charge on Investor A Shares.
Investors are unable to purchase the index directly, although they can
invest in the underlying securities.
The municipal bond market has continued to move to lower trading ranges than
those shown in earlier periods. Intermediate to long-term bonds have provided
the best returns during the period due to the decline in interest rates.
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We continue to feel that intermediate to longer-term municipal securities
offer the best risk/reward relationship. Therefore, we will structure the
Portfolio with an intermediate duration and a high-quality position.
Due to the decline in interest rates and the portfolio structure, above
average returns, as compared to 1994, were realized by the Portfolio for the
year ending November 30, 1995. The ARCH Missouri Tax-Exempt Bond Portfolio's
Trust Shares had a total return of 18.64%, holding pace with its benchmark,
the Lehman Brothers Municipal Bond Index. The Investor A Shares returned
18.42% before factoring in any sales charge.
Prior to October 2, 1995, the Portfolio was an investment portfolio of The
ARCH Tax-Exempt Trust. The financial history of the Portfolio since its
inception with the Trust is included in this Annual Report.
Investment decisions for The ARCH Tax-Exempt Money Market, The ARCH Missouri
Tax-Exempt Bond and The ARCH Short-Intermediate Municipal Portfolios are made
by Peter Merzian. A Senior Associate with MVA, Mr. Merzian has more than seven
years of investment management experience and has been responsible for the
Portfolios since August 1993 (July 1995 for The ARCH Short-Intermediate
Municipal Portfolio). He is assisted by seasoned research analysts, who
utilize a wide range of technological resources to keep abreast of the markets
and identify promising opportunities.
THE ARCH INTERNATIONAL EQUITY PORTFOLIO
The graph that appears on page 5 of the ARCH Funds annual report represents a
comparison between a $10,000 investment made on April 4, 1994 in The ARCH
International Equity Portfolio in the following classes of shares: Trust,
Institutional, Investor A (No Load), Investor A (Load), Investor B (No CDSC) and
Investor B (CDSC) as compared to the Morgan Stanley Europe, Australia & Far East
Index. The chart indicates that $10,000 invested on April 4, 1994, in Trust
Shares would have been worth $10,810, in Institutional Shares would have worth
$10,770, in Investor A (No Load) it would have been worth $10,780, in Investor A
(Load) would have been worth $10,296, in Investor B (No CDSC) it would have been
worth $10,730 and in Investor B (CDSC) it would have been worth $10,330 on
November 30, 1995 as opposed to $11,189 had the money been invested in the
Morgan Stanley Europe, Australia & Far East Index.
The table that appears on page 5 indicates that The ARCH International Equity
Portfolio Trust Shares had a one-year average annual total return of 8.97% and a
since inception (04/04/94) average annual total return of 4.80% as of 11/30/95.
For the period ended 12/31/95, the Portfolio's Trust Shares had a one-year
average annual total return of 9.59% and since inception of 5.56%. The
Portfolio's Institutional Shares had a one-year average annual total return of
8.78% and since inception of 4.57% as of 11/30/95. For the period ended
12/31/95, the Portfolio's Institutional Shares had a one-year average annual
total return of 9.21% and since inception of 5.23%. The Portfolio's Investor A
(Load) Shares had a one-year average annual total return of 3.95% and since
inception (04/04/94) of 1.77% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (Load) Shares had a one-year average annual total return
of 4.49% and since inception of 2.60%. The Portfolio's Investor A (No Load)
Shares had a one-year average annual total return of 8.89% and since inception
(04/04/94) of 4.63% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (No Load) Shares had a one-year average annual total
return of 9.41% and since inception of 5.34%. The Portfolio's Investor B (CDSC)
Shares had a one-year average annual total return of 3.38% and since inception
(04/04/94) of 1.97% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (CDSC) Shares had a one-year average annual total return
of 3.91% and since inception of 2.83%. The Portfolio's Investor B (No CDSC)
Shares had a one-year average annual total return of 8.38% and since inception
(04/04/94) of 4.33% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (No CDSC) Shares had a one-year average annual total
return of 8.91% and since inception of 5.06%.
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Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio which has been restated
to reflect the contingent deferred sales charges payable by holders of
Investor B shares that redeem within six years of the date of purchase.
Investor B shares are also subject to distribution and services fees at a
maximum annual rate of 1.00%. Had those distribution and services fees
been reflected, performance would have been reduced.
The ARCH International Equity Portfolio is measured against the Morgan
Stanley EAFE (Europe, Australia & Far East) Index, an unmanaged index
generally representative of international stocks. It does not reflect the
deduction of expenses associated with a mutual fund, such as sales
charges, investment management and fund accounting fees. The performance
of the Portfolio shown on the graph reflects the deduction of these value-
added services, as well as the deduction of the 4.5% sales charge on
Investor A Shares. Investors are unable to purchase the index directly,
although they can invest in the underlying securities.
The ARCH International Equity Portfolio is designed for investors looking to
capitalize on the growth opportunities available through the international
stock markets while having the advantage of a mutual fund's diversification*.
Diversification cushions the impact that a decline in the value of any one
security can have on the overall portfolio.
The ARCH International Equity Portfolio adds value through stock selection
and through active country allocation. As of November 30, 1995, the Portfolio
was heavily weighted in Continental Europe (49.36%) and Japan (33.35%) and
weighted to a lesser extent in the Pacific Rim (6.06%), South America (2.03%),
India (0.84%), China (0.59%) and South Korea (2.06%).
For the year ended November 30, 1995, the Portfolio's Trust Shares had a
total return of 8.97%, outperforming its benchmark, the Morgan Stanley EAFE
Index. Investor A Shares returned 8.89% before factoring in any sales charge.
The Portfolio's management team is lead by Frances Dakers of Clay Finlay,
Inc. Ms. Dakers, a Principal of Clay Finlay, has been with the firm since
January, 1982.
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* International investing is subject to certain factors such as currency
exchange rate volatility, possible political, social or economic
instability, foreign taxation and/or differences in auditing and other
financial standards.
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THE ARCH GROWTH & INCOME EQUITY PORTFOLIO
[GRAPH APPEARS HERE]
The graph that appears on page 7 of the ARCH Funds annual report represents a
comparison between a $10,000 investment made on June 2, 1988 in The ARCH Growth
& Income Equity Portfolio in the following classes of shares: Trust,
Institutional, Investor A (No Load), Investor A (Load), Investor B (No CDSC) and
Investor B (CDSC) as compared to the S&P 500. The chart indicates that $10,000
invested on June 2, 1988, in Trust Shares would have been worth $28,727, in
Institutional it would have been worth $26,604, in Investor A (No Load) it would
have been worth $26,622, in Investor A (Load) would have been worth $25,473, in
Investor B (No CDSC) it would have been worth $26,472 and in Investor B (CDSC)
it would have been worth $26,472 on November 30, 1995 as opposed to $29,168 had
the money been invested in the S&P 500.
The table that appears on page 7 indicates that The ARCH Growth & Income Equity
Portfolio Trust Shares had a one-year average annual total return of 32.27% and
a since inception (6/2/88) average annual total return of 14.00% as of 11/30/95.
For the period ended 12/31/95, the Portfolio's Trust Shares had a one-year
average annual total return of 34.39% and since inception of 14.14%. The
Portfolio's Institutional Shares had a one-year average annual total return of
31.88% and since inception of 13.93% as of 11/30/95. For the period ended
12/31/95, the Portfolio's Institutional Shares had a one-year average annual
total return of 33.98% and since inception of 14.07%. The Portfolio's Investor A
(Load) Shares had a one-year average annual total return of 26.00% and since
inception (6/2/88) of 13.28% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (Load) Shares had a one-year average annual total return
of 28.10% and since inception of 13.43%. The Portfolio's Investor A (No Load )
Shares had a one-year average annual total return of 31.95% and since inception
(6/2/88) of 13.94% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (No Load) Shares had a one-year average annual total
return of 34.13% and since inception of 14.09%. The Portfolio's Investor B
(CDSC) Shares had a one-year average annual total return of 26.20% and since
inception (6/2/88) of 13.86% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (CDSC) Shares had a one-year average annual total return
of 28.36% and since inception of 14.00%. The Portfolio's Investor B (No CDSC)
Shares had a one-year average annual total return of 31.20% and since inception
(6/2/88) of 13.86% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (No CDSC) Shares had a one-year average annual total
return of 33.36% and since inception of 14.00%.
Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio which has been restated
to reflect the contingent deferred sales charges payable by holders of
Investor B shares that redeem within six years of the date of purchase.
Investor B shares are also subject to distribution and services fees at a
maximum annual rate of 1.00%. Had those distribution and services fees
been reflected, performance would have been reduced.
The ARCH Growth & Income Equity Portfolio is measured against the Standard
& Poor's 500 Index, an unmanaged index generally representative of the
U.S. stock market. It does not reflect the deduction of expenses
associated with a mutual fund, such as sales charges, investment
management and fund accounting fees. The performance of the Portfolio
shown on the graph reflects the deduction of these value-added services,
as well as the deduction of a 4.5% sales charge on Investor A Shares.
Investors are unable to purchase the index directly, although they can
invest in the underlying securities.
The ARCH Growth & Income Equity Portfolio seeks to provide investors with
long-term capital growth by investing primarily in stocks of companies with
solid growth potential; income is a secondary objective.
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The stock market achieved record highs throughout the latter half of 1995
driven by record levels of money flows into mutual funds investing in U.S.
stocks. In addition, the equity market benefitted from a 25% decline in long-
term interest rates in response to a utopian growth/inflation economic
environment which also focused the flow of money towards U.S. equities and
away from weaker financial markets overseas.
The strong performance of the major indices, however, clouded a weaker
underlying environment. The stock market's focus was very narrow and primarily
centered upon the larger capitalization stocks which have the greatest
influence on the indices. The performance of the average stock was well below
its index. Economic sectors and industries which registered particularly
strong performance included technology, financial services, and
pharmaceuticals.
As a preview to 1996, we continue to find individual stocks as well as
selected industries attractive; however, we are aware that a duplication of
1995 may not be realistic. Our portfolios are currently in a very defensive
posture, well diversified, but with a definite bias towards stocks of
companies with high predictable earnings growth prospects.
We currently hold growth positions in names such as Pfizer, Schering Plough,
Duracell, Microsoft, Automatic Data Processing, and Sysco. Financial stock
holdings in First USA, NationsBank, Crestar Financial, and Chemical Bank
continue to offer excellent value and good yields. The Portfolio's composition
is subject to change.
For the year ended November 30, 1995, the Portfolio's Trust Shares had an
total return of 32.27%, and Investor A Shares returned 31.95% before factoring
in any sales charge, underperforming its benchmark, the S&P 500.
The ARCH Growth & Income Equity Portfolio is managed by an investment team
led by Gene Gillespie, Director of Research, who has more than 27 years of
investment experience.
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THE ARCH BALANCED PORTFOLIO
The graph that appears on page 9 of the ARCH Funds annual report represents a
comparison between a $10,000 investment made on April 1, 1993 in The Arch
Balanced Portfolio in the following classes of shares: Trust, Institutional,
Investor A (No Load), Investor A (Load), Investor B (No CDSC) and Investor B
(CDSC) as compared to the S&P 500 and the Lehman Brothers Aggregate Bond
Indexes. The chart indicates that $10,000 invested on April 1, 1993, in Trust
Shares would have been worth $12,744, in Institutional it would have been worth
$12,690, in Investor A (No Load) it would have been worth $12,719, in Investor
A (Load) would have been worth $12,148, in Investor B (No CDSC) it would have
been worth $12,806 and in Investor B (CDSC) it would have been worth $12,506 on
November 30, 1995 as opposed to $14,424 and $12,007 had the money been invested
in the S&P 500 and the Lehman Brothers Aggregate Bond Indexes, respectively.
The table that appears on page 9 indicates that The ARCH Balanced Portfolio
Trust Shares had a one-year average annual total return of 24.97% and a since
inception (4/1/93) average annual total return of 9.51% as of 11/30/95. For the
period ended 12/31/95, the Portfolio's Trust Shares had a one-year average
annual total return of 26.42% and since inception of 9.89%. The Portfolio's
Institutional Shares had a one-year average annual total return of 24.67% and
since inception of 9.34% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Institutional Shares had a one-year average annual total return of
26.00% and since inception of 9.69%. The Portfolio's Investor A (Load) Shares
had a one-year average annual total return of 19.26% and since inception
(4/1/93) of 7.56% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (Load) Shares had a one-year average annual total return
of 20.62% and since inception 7.96%. The Portfolio's Investor A (No Load)
Shares had a one-year average annual total return of 24.85% and since inception
(4/1/93) of 9.43% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (No Load) Shares had a one-year average annual total
return of 26.30% and since inception 9.77%. The Portfolio's Investor B (CDSC)
Shares had a one-year average annual total return of 18.92% and since inception
(4/1/93) of 8.74% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (CDSC) Shares had a one-year average annual return of
20.30% and since inception of 9.10%. The Portfolio's Investor B (No CDSC)
Shares had a one-year average annual total return of 23.92% and since inception
(4/1/93) of 9.71% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (No CDSC) Shares had a one-year average annual total
return of 25.30% and since inception of 10.03%.
Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio which has been restated
to reflect the contingent deferred sales charges payable by holders of
Investor B shares that redeem within six years of the date of purchase.
Investor B shares are also subject to distribution and services fees at a
maximum annual rate of 1.00%. Had those distribution and services fees
been reflected, performance would have been reduced.
The ARCH Balanced Portfolio is measured against the Standard & Poor's 500
Index, an unmanaged index generally representative of the U.S. stock
market, and the Lehman Bros. Aggregate Bond Index--an unmanaged index
comprised of the Lehman Bros. Government/Corporate Bond Index and two
Lehman Bros. asset-backed securities indices. These indices do not reflect
the deduction of expenses associated with a mutual fund, such as sales
charges, investment management and fund accounting fees. The performance
of the Portfolio shown on the graph reflects the deduction of these value-
added services, as well as the deduction of a 4.5% sales charge on
Investor A Shares. Investors are unable to purchase the index directly,
although they can invest in the underlying securities.
The ARCH Balanced Portfolio is designed for investors who want to
participate in the stock and fixed-income markets with the portfolio mix being
determined by the investment professionals at MVA.
-9-
<PAGE>
For the year ended November 30, 1995, the Portfolio's Trust Shares had a
total return of 24.97%. The Investor A Shares returned 24.85% before factoring
in any sales charge, underperforming the S&P 500, while outperforming the
Lehman Brothers Aggregate Bond Index.
The stock portion of this Portfolio is managed in a manner similar to that
used for The ARCH Growth & Income Equity Portfolio and the fixed-income
portion of this portfolio in a manner similar to that used for The ARCH
Government & Corporate Bond Portfolio.
As of November 30, 1995, the portfolio weighting of The ARCH Balanced
Portfolio was 55.5% in stocks, 32.9% in fixed-income securities and 11.6% in
cash and cash equivalents. The prospect of declining economic growth and
corporate profits has prompted us to take a more defensive position on the
stock side. Bonds have, however, become more attractive as the economy slows
and interest rates are reduced.
Gene Gillespie, who heads the investment team that manages The ARCH Growth &
Income Equity Portfolio is also responsible for the management of The ARCH
Balanced Portfolio.
THE ARCH EMERGING GROWTH PORTFOLIO
The graph that appears on page 10 of the ARCH Funds annual report represents a
comparison between a $10,000 investment made on May 6, 1992 in The ARCH Emerging
Growth Portfolio in the following classes of shares: Trust, Institutional,
Investor A (No Load), Investor A (Load), Investor B (No CDSC) and Investor B
(CDSC) as compared to the Russell 2000 and NASDAQ. The chart indicates that
$10,000 invested on May 6, 1992, in Trust Shares would have been worth $17,642,
in Institutional it would have worth $17,531, in Investor A (No Load) it would
have been worth $17,579, in Investor A (Load) would have been worth $16,790, in
Investor B (No CDSC) it would have been worth $17,487 and in Investor B (CDSC)
it would have been worth $17,187 on November 30, 1995 as opposed to $16,680 and
$18,304 had the money been invested in the Russell 2000 and NASDAQ,
respectively.
The table that appears on page 10 indicates that The ARCH Emerging Growth
Portfolio Trust Shares had a one-year average annual total return of 21.70% and
a since inception (5/6/92) average annual total return of 17.22% as of 11/30/95.
For the period ended 12/31/95, the Portfolio's Trust Shares had a one-year
average annual total return of 17.18% and since inception of 16.11%. The
Portfolio's Institutional Shares had a one-year average annual total return of
21.43% and since inception of 17.01% as of 11/30/95. For the period ended
12/31/95, the Portfolio's Institutional Shares had a one-year average annual
total return of 16.89% and since inception of 15.91%. The Portfolio's Investor A
(Load) Shares had a one-year average annual total return of 16.04% and since
inception (5/6/92) of 15.61% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (Load) Shares had a one-year average annual total return
of 11.87% and since inception of 14.57%. The Portfolio's Investor A (No Load)
Shares had a one-year average annual total return of 21.47% and since inception
(5/6/92) of 17.11% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (No Load) Shares had a one-year average annual total
return of 17.14% and since inception of 16.02%. The Portfolio's Investor B
(CDSC) Shares had a one-year average annual total return of 15.83% and since
inception (5/6/92) of 16.37% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (CDSC) Shares had a one-year average annual total return
of 11.42% and since inception of 15.27%. The Portfolio's Investor B (No CDSC)
Shares had a one-year average annual total return of 20.83% and since inception
(5/6/92) of 16.93% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (No CDSC) Shares had a one-year average annual total
return of 16.42% and since inception of 15.83%.
-10-
<PAGE>
Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio which has been restated
to reflect the contingent deferred sales charges payable by holders of
Investor B shares that redeem within six years of the date of purchase.
Investor B shares are also subject to distribution and services fees at a
maximum annual rate of 1.00%. Had those distribution and services fees
been reflected, performance would have been reduced.
The ARCH Emerging Growth Portfolio is measured against the Russell 2000
Index, an unmanaged index generally representative of the total return of
small- to mid-sized companies. It does not reflect the deduction of
expenses associated with a mutual fund, such as sales charges, investment
management and fund accounting fees. In prior reports, performance was
measured against the NASDAQ Composite Index, an unmanaged index generally
representative of the total return of small- to mid-sized companies. The
benchmark was changed to the Russell 2000 Index, a benchmark more narrowly
focused on small-sized company stocks. The performance of the Portfolio
shown on the graph reflects the deduction of these value-added services,
as well as the deduction of a 4.5% sales charge on Investor A Shares.
Investors are unable to purchase the index directly, although they can
invest in the underlying securities.
The ARCH Emerging Growth Portfolio is designed to take advantage of the
opportunity in smaller growth companies.* The Portfolio's investment strategy
is one of buying relative value within emerging growth industries as well as
seeking out the best values in specialized segments of more mature industries.
Also considered for purchase are small companies with unique features
including turnarounds, asset values, high cash flows, or other factors which
offer the potential for above average capital appreciation. Since we believe
our strength is in stock selection and not in market timing, the objective of
the Portfolio is to stay fully invested and broadly diversified among economic
sectors.
The fourth quarter of 1995 showed a continuation of the same trends which
began in the third quarter, as momentum/growth was again the predominant theme
in a very narrow market. In the fourth quarter, small cap stocks continued to
lag the S&P 500 and growth once again outperformed value. In 1995, the Lipper
Small Company Growth Index rose approximately 10 percentage points more than
value funds in this very momentum driven market. This represents the largest
gap of growth over value since 1991. For the quarter and the year, The ARCH
Emerging Growth Portfolio was below that of the Russell 2000. By sectors,
financial services showed a solid performance in the fourth quarter with
lagging sectors including consumer, energy, autos and transportation, and
capital goods.
Our largest holdings at the end of November included Avid Technologies
(2.47%), Department 56, Inc. (2.33%), Allergan (2.19%), Scherer RP Corp.
(2.25%), Hanna Co. (2.12%), and Finova Group (2.05%). Total net assets for the
Portfolio was approximately $173 million at November 30, 1995 with
approximately 4.5% of the Portfolio's assets in cash reserves. The Portfolio's
composition is subject to change.
For the year ended November 30, 1995, the Portfolio's Trust Shares had a
total return of 21.70%, and Investor A Shares returned 21.47% before factoring
in any sales charge, underperforming its benchmark, the Russell 2000 Index.
The Portfolio's management team is led by Robert J. Anthony, who has over 22
years of investment management experience. Mr. Anthony has been managing the
Portfolio since its inception on May 1, 1992.
- ------
* Small capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and by definition are not
as well established as "blue chip" companies. Historically, smaller
companies' stocks have experienced a greater degree of market volatility
than average.
-11-
<PAGE>
THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
The graph that appears on page 12 of the ARCH Funds annual reports represents a
comparison between a $10,000 investment made on June 15, 1988 in The ARCH
Government & Corporate Bond Portfolio in the following classes of shares: Trust,
Institutional, Investor A (No Load), Investor A (Load), Investor B (No CDSC) and
Investor B (CDSC) as compared to the Lehman Brothers Aggregate Bond Index. The
chart indicates that $10,000 invested on June 15, 1988, in Trust Shares would
have been worth $18,359, in Institutional it would have been worth $18,104, in
Investor A (No Load) it would have been worth $18,104, in Investor A (Load)
would have been worth $17,232, in Investor B (No CDSC) it would have been worth
$17,994 and in Investor B (CDSC) it would have been worth $17,994 on November
30, 1995 as opposed to $19,889 had the money been invested in the Lehman
Brothers Aggregate Bond Index.
The table that appears on page 12 indicates that The ARCH Government & Corporate
Bond Portfolio Trust Shares had a one-year average annual total return of 16.31%
and since inception (6/15/88) average annual total return of 8.48% as of
11/30/95. For the period ended 12/31/95, the Portfolio's Trust Shares had a one
year average annual total return of 16.96% and since inception of 8.59%. The
Portfolio's Institutional Shares had a one-year average annual total return of
15.98% and since inception of 8.27% as of 11/30/95. For the period ended
12/31/95, the Portfolio's Institutional Shares had a one-year average annual
total return of 16.64% and since inception of 8.38%. The Portfolio's Investor A
(Load) Shares had a one-year average annual total return of 10.81% and since
inception (6/15/88) of 7.56% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (Load) Shares had a one-year average annual total return
of 11.45% and since inception of 7.68%. The Portfolio's Investor A (No Load)
Shares had a one-year average annual total return of 15.98% and since inception
(6/15/88) of 8.27% as if 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (No Load) Shares had a one-year average annual total
return of 16.76% and since inception of 8.38%. The Portfolio's Investor B (CDSC)
Shares had a one-year average annual total return of 10.27% and since inception
(6/15/88) of 8.19% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (CDSC) Shares had a one-year average annual total return
of 10.98% and since inception of 8.29%. The Portfolio's Investor B (No CDSC)
Shares had a one-year average annual total return of 15.27% and since inception
(6/15/88) of 8.19% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor B (No CDSC) Shares had a one-year average annual total
return of 15.98% and since inception of 8.29%.
Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio which has been restated
to reflect the contingent deferred sales charges payable by holders of
Investor B shares that redeem within six years of the date of purchase.
Investor B shares are also subject to distribution and services fees at a
maximum annual rate of 1.00%. Had those distribution and services fees
been reflected, performance would have been reduced.
The ARCH Government & Corporate Bond Portfolio is measured against the
Lehman Bros. Aggregate Bond Index--an unmanaged index comprised of the
Lehman Bros. Government/Corporate Bond Index and two Lehman Bros. asset-
backed securities indices. It does not reflect the deduction of expenses
associated with a mutual fund, such as sales charges, investment
management and fund accounting fees. The performance of the Portfolio
shown on the graph reflects the deduction of these value-added services,
as well as the deduction of a 4.5% sales charge on Investor A Shares.
Investors are unable to purchase the index directly, although they can
invest in the underlying securities.
The corporate sector of the bond market was up 22.25% for the year 1995. This
was considerably ahead of the 18.35% return of the treasury market. Corporate
bonds rated BAA had the best return of the corporate bond market at 22.72%,
followed by corporate bonds rated A at 22.44% and corporate bonds rated AAA at
21.42%. The corporate bonds rated AA lagged the entire group returning 21.29%.
-12-
<PAGE>
Of the sectors that we invest in, treasuries, corporates and mortgages, the
mortgage market had the lowest return for the year of 16.8%. On a relative
basis, 16.8% does not sound as good as the 18.35% return of the treasury
market, but on an absolute basis, both are sound returns.
The primary factor to keep in mind is that we started 1995 with the Federal
Reserve still raising short-term interest rates. The last increase in Federal
Funds occurred in February of 1995 when they raised Fed Funds from 5.5% to
6.0%. Since then, the Federal Reserve has cut the Fed Funds rate twice, once
in July and once in December, both times the cut was only 25%, yet the market
reacted as though the Federal Reserve had been cutting the Fed Funds rate by a
full percentage point each time.
We continue to be somewhat conservative. We have lightened our position in
30 year treasuries and increased our holdings in the shorter 3 to 10 year
maturities. We believe the 3 to 10 year maturities to have the most potential
for further price appreciation, while the longer maturities may be subject to
price declines.
For the year ended November 30, 1995, The ARCH Government & Corporate Bond
Portfolio's Trust Shares had a total return of 16.31%. The Investor A Shares
returned 15.98% before factoring in any sales charge, slightly underperforming
its benchmark, the Lehman Brothers Aggregate Bond Index.
THE ARCH U.S. GOVERNMENT SECURITIES PORTFOLIO
The graph that appears on page 13 of the ARCH Funds annual report represents a
comparison between a $10,000 investment made on June 2, 1988 in The ARCH U.S.
Government Securities Portfolio in the following classes of shares: Trust,
Institutional, Investor A (No Load), Investor A (Load), Investor B (No CDSC) and
Investor B (CDSC) as compared to the Lehman Intermediate Government Index and
the Lehman Brothers Government Bond Index. The chart indicates that $10,000
invested on June 2, 1988, in Trust Shares would have been worth $18,564, in
Institutional it would have been worth $18,247, in Investor A (No Load) it would
have been worth $18,302, in Investor A (Load) would have been worth $17,434, in
Investor B (No CDSC) it would have been worth $18,012 and in Investor B (CDSC)
it would have been worth $18,012 on November 30, 1995 as opposed to $18,768 and
$20,251 had the money been invested in the Lehman Intermediate Government and
the Lehman Brothers Government Bond Indexes, respectively.
The table that appears on page 13 indicates that The ARCH U.S. Government
Securities Portfolio Trust Shares had a one-year average annual total return of
15.00% and a since inception (6/2/88) average annual total return of 8.60% as of
11/30/95. For the period ended 12/31/95, the Portfolio's Trust Shares had a one-
year average annual total return of 15.31% and since inception of 8.65%. The
Portfolio's Institutional Shares had a one-year average annual total return of
14.69% and since inception of 8.35% as of 11/30/95. For the period ended
12/31/95, the Portfolio's Institutional Shares had a one-year average annual
total return of 14.90% and since inception of 8.39%. The Portfolio's Investor A
(Load) Shares had a one-year average annual total return of 9.54% and since
inception (6/2/88) of 7.69% as of 11/30/95. For the period ended 12/31/95, the
Portfolio's Investor A (Load) Shares had a one-year average annual total return
of 9.84% and since inception of 7.75%. The Portfolio's Investor A (No Load)
Shares had a one-year average annual total return of 14.66% and since inception
(6/2/88) of 8.39% as of 11/30/95. For the period ended 12/31/95, the Portfolio's
Investor A (No Load) Shares had a one-year average annual total return of 14.97%
and since inception of 8.44%. The Portfolio's Investor B (CDSC) Shares had a
one-year average annual total return of 7.85% and since inception (6/2/88) of
8.16% as of 11/30/95. For the period ended 12/31/95, the Portfolio's Investor
B (CDSC) Shares had a one-year average annual total return of 8.08% and since
inception of 8.20%. The Portfolio's Investor B (No CDSC) Shares had a one-year
average annual total return of 12.85% and since inception (6/2/88) of 8.16% as
of 11/30/95. For the period ended 12/31/95, the Portfolio's Investor B (No CDSC)
Shares had a one-year average annual total return of 13.08% and since inception
of 8.20%.
-13-
<PAGE>
Past performance is not predictive of future results. Investment return
and principal value of The ARCH Funds will fluctuate so that the shares,
when redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio which has been restated
to reflect the contingent deferred sales charges payable by holders of
Investor B shares that redeem within six years of the date of purchase.
Investor B shares are also subject to distribution and services fees at a
maximum annual rate of 1.00%. Had those distribution and services fees
been reflected, performance would have been reduced.
The ARCH U.S. Government Securities Portfolio is measured against the
Lehman Brothers Intermediate Government Bond Index, an unmanaged index
generally representative of the total return of intermediate-term U.S.
Government securities. It does not reflect the deduction of expenses
associated with a mutual fund, such as sales charges, investment
management and fund accounting fees. The performance of the Portfolio
shown on the graph reflects the deduction of these value-added services,
as well as the deduction of a 4.5% sales charge on Investor A Shares.
Investors are unable to purchase the index directly, although they can
invest in the underlying securities.
The Federal Reserve has finally cut the targeted Fed Funds rate. The first
rate cut occurred in July of 1995 and the second occurred in December, both
cuts were for .25%, bringing the targeted funds level down to 5.5%. The
Intermediate Government market returned 14.41% for 1995. The government market
components, treasuries and agencies, recorded almost the same returns as the
composite, 14.42% and 14.38%, respectively.
Treasury yields have fallen dramatically across the maturity spectrum, from
one-year Treasury bills to 30-year Treasury bonds. The magnitude of the drop,
however, far exceeds the meager .50% decline of the Fed Funds rate. The rate
of the one-year Treasury bill declined 2.03% before settling at 5.13%. The 30-
year bond yield declined 1.93%, settling at 5.95%. This is almost a flat 2%
decline in rates for only a .50% easing by the Federal Reserve.
We do not expect the same spectacular returns during 1996 as we had in 1995.
The market appears to have already discounted a further 1.5 to 2% easing by
the Federal Reserve. If the Federal Reserve does ease further from here, we
expect that most of the reaction will come in the shorter maturities. The two
years out to the 10-year treasuries may have some room to further appreciate
in price. However, the 30-year treasury is already trading within .20% of the
low in yields recorded back in 1993, when Fed Funds were trading at 3.0%.
For the year ended November 30, 1995, the Portfolio's Trust Shares had a
total return of 15.00%. The Investor A Shares returned 14.66% before factoring
in any sales charge, keeping pace with its benchmark, The Lehman Brothers
Intermediate Government Index. The comparative index, The Lehman Brothers
Government Bond Index, which was used in the last report, is more broad-based
while the ARCH U.S. Government Securities Portfolio is managed more
conservatively with a shorter average maturity. As a result, this index has
been replaced by the Lehman Intermediate Government Index, which we believe to
be a more appropriate benchmark for this fund.
The ARCH Government & Corporate Bond and U.S. Government Securities
Portfolios are managed by Senior Associate David Bethke, a Chartered Financial
Analyst with over 11 years' investment management experience.
* * * * * *
-14-
<PAGE>
In closing, we are quite pleased with the performance of The ARCH Fund
Portfolios this year and hope that you are also. We thank you for your
continued confidence and trust in The ARCH Mutual Funds and look forward to
continuing to provide you with expert investment management to help you meet
your present and future financial needs.
If you should require any assistance or additional information not contained
in this report, please feel free to call your Investment Representative or The
ARCH Shareholder Servicing Center at 1-800-452-ARCH.
Sincerely,
/s/ Jerry V. Woodham /s/ John H. Blixen
Jerry V. Woodham John H. Blixen
Chairman President
The ARCH Funds, Inc. Mississippi Valley Advisors Inc.
Investment Adviser
Performance data quoted represent past performance and are not indicative of
future results. Investment return and the principal value of an investment in
the variable net asset value portfolios will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost. A
portion of the fees on The ARCH Portfolios were waived during the period,
resulting in higher total returns than would occur if the full fees were
charged. An investment in the Portfolios are neither insured nor guaranteed by
the U.S. Government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any government agency, are not obligations or guaranteed, or
endorsed by the bank, or the distributor. An investment in the Portfolios
involves investment risk, including the possible loss of principal. The Money
Market Portfolios' yields will fluctuate and there can be no assurance that
the funds will be able to maintain a stable net asset value of $1.00 per
share. The composition of the Portfolios' holdings is subject to change. This
material must be accompanied or preceded by a prospectus for The ARCH Funds.
The ARCH Mutual Funds are distributed by BISYS Fund Services.
-15-
<PAGE>
TABLE OF CONTENTS
Independent Auditors' Report
Page 17
Statements of Assets and Liabilities
Page 18
Statements of Operations
Page 24
Statements of Changes in Net Assets
Page 27
Schedules of Portfolio Investments
Page 31
Notes to Financial Statements
Page 59
Financial Highlights
Page 74
-16-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors of
The ARCH Fund, Inc.:
We have audited the accompanying statements of assets and liabilities of The
ARCH Fund, Inc.--Money Market Portfolio, Treasury Money Market Portfolio, Tax-
Exempt Money Market Portfolio, Growth & Income Equity Portfolio, Emerging
Growth Portfolio, Balanced Portfolio, Government & Corporate Bond Portfolio,
U.S. Government Securities Portfolio, Missouri Tax-Exempt Bond Portfolio,
Short-Intermediate Municipal Portfolio, and International Equity Portfolio,
including the schedules of portfolio investments, as of November 30, 1995, and
the related statements of operations, statements of changes in net assets and
the financial highlights for each of the periods indicated herein. These
financial statements and the financial highlights are the responsibility of
The ARCH Fund, Inc.'s management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification of securities
owned as of November 30, 1995, by examination and other appropriate audit
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned funds comprising The ARCH Fund, Inc. at November
30, 1995, the results of their operations, the changes in their net assets and
the financial highlights for each of the periods indicated herein, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
January 17, 1996
-17-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
TREASURY TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value.................. $798,340,875 $256,284,774 $83,182,657
Cash................................... 104 329
Interest and dividends receivable...... 1,675,374 380,384 566,250
Unamortized organization costs......... 7,151
Prepaid expenses and other assets...... 17,695 5,809 3,985
------------ ------------ -----------
Total Assets......................... 800,034,048 256,678,447 83,752,892
------------ ------------ -----------
LIABILITIES:
Dividends payable...................... 3,306,753 964,923 219,667
Payable to brokers for investments
purchased............................. 20,000,000
Accrued expenses and other payables:
Investment advisory fees.............. 220,399 69,385 24,341
Administration fees................... 21,165 6,605 2,349
Distribution and services fees........ 44,225 16,245 1,802
Accounting and custodian fees......... 12,161 5,038 1,639
Other................................. 93,655 31,261 68,469
------------ ------------ -----------
Total Liabilities.................... 23,698,358 1,093,457 318,267
------------ ------------ -----------
NET ASSETS:
Capital................................ 776,330,278 255,572,293 83,430,673
Accumulated undistributed net realized
gains from investment transactions.... 5,412 12,697 3,952
------------ ------------ -----------
Net Assets........................... $776,335,690 $255,584,990 $83,434,625
============ ============ ===========
</TABLE>
Continued
-18-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
TREASURY TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
Net Assets
Investor A Shares..................... 64,865,246 2,776,250 5,403,484
Trust Shares.......................... 698,130,844 252,780,403 78,031,141
Institutional Shares.................. 13,339,600 28,337
------------ ------------ -----------
Total................................ $776,335,690 $255,584,990 $83,434,625
============ ============ ===========
Outstanding shares of common stock
Investor A Shares..................... 64,864,840 2,776,148 5,403,197
Trust Shares.......................... 698,125,944 252,767,808 78,027,476
Institutional Shares.................. 13,339,494 28,337
------------ ------------ -----------
Total................................ 776,330,278 255,572,293 83,430,673
============ ============ ===========
Net asset value
Investor A Shares(a).................. $ 1.00 $ 1.00 $ 1.00
Trust Shares(a)....................... 1.00 1.00 1.00
Institutional Shares(a)............... 1.00 1.00
============ ============ ===========
Investments, at cost.................. $798,340,875 $256,284,774 $83,182,657
============ ============ ===========
</TABLE>
- ------
(a)Offering price and redemption price are the same.
See notes to financial statements.
-19-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
GROWTH & EMERGING GOVERNMENT &
INCOME EQUITY GROWTH BALANCED CORPORATE BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value... $350,704,870 $176,472,946 $116,871,791 $141,579,698
Cash.................... 192 328 31,444
Interest and dividends
receivable............. 725,295 108,530 663,062 1,908,457
Receivable from brokers
for investments sold... 1,402,234 575,625 418,169 52,349
Receivable for portfolio
shares issued.......... 40,165 27,971 2,000
Unamortized organization
costs.................. 9,661 12,133
Prepaid expenses and
other assets........... 19,391 9,697 16,417 4,828
------------ ------------ ------------ ------------
Total Assets.......... 352,891,955 177,204,622 117,983,900 143,576,776
------------ ------------ ------------ ------------
LIABILITIES:
Cash overdraft.......... 7,791
Payable to brokers for
investments purchased.. 4,096,148
Dividends payable....... 732,641
Payable for portfolio
shares redeemed........ 10,148 2,236 5,018
Accrued expenses and
other payables:
Investment advisory
fees.................. 156,715 105,298 71,604 52,154
Administration fees.... 9,619 4,689 3,208 3,871
Distribution and
services fees......... 16,304 8,377 10,971 3,689
Accounting and
custodian fees........ 9,943 5,888 3,354 4,466
Other.................. 44,908 21,840 15,087 18,911
------------ ------------ ------------ ------------
Total Liabilities..... 255,428 4,244,476 104,224 820,750
------------ ------------ ------------ ------------
NET ASSETS:
Capital................. 272,406,210 151,316,140 102,162,127 137,838,643
Undistributed net
investment income...... 1,009,093 163,419 714,226
Net unrealized
appreciation from
investments............ 60,060,789 8,069,615 11,057,385 6,974,316
Accumulated
undistributed net
realized gains (losses)
from investment
transactions........... 19,160,435 13,410,972 3,945,938 (2,056,933)
------------ ------------ ------------ ------------
Net Assets............ $352,636,527 $172,960,146 $117,879,676 $142,756,026
============ ============ ============ ============
</TABLE>
Continued
-20-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
GROWTH & EMERGING GOVERNMENT &
INCOME EQUITY GROWTH BALANCED CORPORATE BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Net Assets
Investor A Shares...... 25,081,694 15,056,268 8,347,972 5,496,120
Investor B Shares...... 780,588 603,259 36,384 106,449
Trust Shares........... 286,546,293 139,681,067 72,668,644 127,740,954
Institutional Shares... 40,227,952 17,619,552 36,826,676 9,412,503
------------ ------------ ------------ ------------
Total................. $352,636,527 $172,960,146 $117,879,676 $142,756,026
============ ============ ============ ============
Outstanding shares of
common stock
Investor A Shares...... 1,538,629 1,119,927 716,840 521,953
Investor B Shares...... 48,088 45,121 3,139 10,112
Trust Shares........... 17,561,122 10,353,157 6,240,356 12,130,932
Institutional Shares... 2,470,228 1,314,682 3,169,790 893,870
------------ ------------ ------------ ------------
Total................. 21,618,067 12,832,887 10,130,125 13,556,867
============ ============ ============ ============
Net Asset Value
Investor A Shares--
redemption price per
share................. $ 16.30 $ 13.44 $ 11.65 $ 10.53
Investor B Shares--
offering price per
share*................ 16.23 13.37 11.59 10.53
Trust Shares--offering
and redemption price
per share............. 16.32 13.49 11.64 10.53
Institutional Shares--
offering and
redemption price per
share................. 16.29 13.40 11.62 10.53
============ ============ ============ ============
Maximum Sales Charge:
Investor A Shares...... 4.50% 4.50% 4.50% 4.50%
------------ ------------ ------------ ------------
Maximum Offering Price
(100%/(100%-Maximum
Sales Charge)) of net
asset value adjusted to
nearest cent) per
share: Investor A
Shares................. $ 17.07 $ 14.07 $ 12.20 $ 11.03
============ ============ ============ ============
Investments, at cost.... $290,644,081 $168,403,331 $105,814,406 $134,605,382
============ ============ ============ ============
</TABLE>
- ------
*Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements.
-21-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
MISSOURI SHORT-
U.S. GOVERNMENT TAX-EXEMPT INTERMEDIATE INTERNATIONAL
SECURITIES BOND MUNICIPAL EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value... $54,084,862 $72,149,256 $23,517,394 $40,804,284
Cash.................... 19,972 595 3,261
Foreign currency (cost
$128,471).............. 125,845
Interest and dividends
receivable............. 616,888 1,137,324 308,103 62,098
Receivable from brokers
for investments sold... 675 197,055
Net receivable for
forward currency
contracts purchased
and sold............... 1,317
Unamortized organization
costs.................. 18,918 18,369
Prepaid expenses and
other assets........... 2,224 2,785 561 3,791
----------- ----------- ----------- -----------
Total Assets.......... 54,724,621 73,289,365 23,845,571 41,216,020
----------- ----------- ----------- -----------
LIABILITIES:
Cash overdraft.......... 6,670
Dividends payable....... 291,803 275,527 76,598
Payable to brokers for
investments purchased.. 1,222,826
Accrued expenses and
other payables:
Investment advisory
fees.................. 19,972 26,720 38,094
Administration fees.... 1,483 1,983 646 1,628
Distribution and
services fees......... 2,208 4,393 987
Accounting and
custodian fees........ 1,812 2,410 690 22,405
Other.................. 7,090 40,150 13,951 5,583
----------- ----------- ----------- -----------
Total Liabilities..... 324,368 357,853 91,885 1,291,523
----------- ----------- ----------- -----------
NET ASSETS:
Capital................. 53,368,421 70,462,162 23,529,547 37,173,467
Net unrealized
appreciation from
investments............ 848,354 2,783,563 224,139 3,550,532
Net unrealized
depreciation from
translation of assets
and liabilities in
foreign currencies..... (102,000)
Accumulated
undistributed net
realized gains (losses)
from investment
transactions........... 183,478 (314,213) 751,564
Accumulated
undistributed net
realized losses from
foreign currency
transactions........... (1,449,066)
----------- ----------- ----------- -----------
Net Assets............. $54,400,253 $72,931,512 $23,753,686 $39,924,497
=========== =========== =========== ===========
</TABLE>
Continued
-22-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
MISSOURI SHORT-
U.S. GOVERNMENT TAX-EXEMPT INTERMEDIATE INTERNATIONAL
SECURITIES BOND MUNICIPAL EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Net Assets
Investor A Shares...... 8,178,713 24,725,527 10 1,567,574
Investor B Shares...... 41,377 433,001 101,710
Trust Shares........... 45,512,697 47,772,984 23,753,676 36,096,345
Institutional Shares... 667,466 2,158,868
----------- ----------- ----------- -----------
Total................. $54,400,253 $72,931,512 $23,753,686 $39,924,497
=========== =========== =========== ===========
Outstanding shares of
common stock
Investor A Shares...... 753,697 2,106,529 1 145,651
Investor B Shares...... 3,817 36,890 9,496
Trust Shares........... 4,194,338 4,070,452 2,358,291 3,343,882
Institutional Shares... 61,693 200,895
----------- ----------- ----------- -----------
Total................. 5,013,545 6,213,871 2,358,292 3,699,924
=========== =========== =========== ===========
Net Asset Value
Investor A Shares--
redemption price per
share................. $ 10.85 $ 11.74 $ 10.08 $ 10.76
Investor B Shares--
offering price per
share*................ 10.84 11.74 10.71
Trust Shares--offering
and redemption price
per share............. 10.85 11.74 10.07 10.79
Institutional Shares--
offering and
redemption price per
share................. 10.82 10.75
=========== =========== =========== ===========
Maximum Sales Charge:
Investor A Shares...... 4.50% 4.50% 2.50% 4.50%
----------- ----------- ----------- -----------
Maximum Offering Price
(100%/(100%-Maximum
Sales Charge)) of net
asset value adjusted to
nearest cent) per
share: Investor A
Shares................. $ 11.36 $ 12.29 $ 10.34 $ 11.27
=========== =========== =========== ===========
Investments, at cost.... $53,236,508 $69,365,693 $23,293,255 $37,353,300
=========== =========== =========== ===========
</TABLE>
- ------
*Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements.
-23-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
TREASURY TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
FOR THE YEAR FOR THE YEAR FOR THE SIX
ENDED ENDED MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1995 1995 (A)
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income...................... $37,601,082 $12,896,010 $1,756,010
----------- ----------- ----------
Total Income....................... 37,601,082 12,896,010 1,756,010
----------- ----------- ----------
EXPENSES:
Investment advisory fees............. 2,517,524 920,190 184,753
Administration fees.................. 1,258,762 460,094 46,188
Distribution and services fees--
Investor A Shares................... 137,460 6,872 7,090
Administrative services fees--Trust
Shares.............................. 378,044 150,278 5,937
Administrative services fees--
Institutional Shares................ 28,854 36
Custodian fees....................... 85,562 30,549 7,725
Legal and audit fees................. 144,897 49,372 65,963
Organization costs................... 7,111
Directors' fees and expenses......... 29,881 10,317 1,668
Transfer agent fees.................. 105,111 38,004 12,139
Registration and filing fees......... 7,801 5,491 4,017
Printing costs....................... 72,374 44,787 17,577
Other................................ 17,627 6,935 1,045
Expenses voluntarily reduced......... (944,297) (354,324) (23,094)
----------- ----------- ----------
Total Expenses..................... 3,839,600 1,375,712 331,008
----------- ----------- ----------
Net Investment Income................ 33,761,482 11,520,298 1,425,002
----------- ----------- ----------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions............. (6,772) 10,481 4,193
----------- ----------- ----------
Net realized/unrealized gains
(losses) from investments........... (6,772) 10,481 4,193
----------- ----------- ----------
Change in net assets resulting from
operations.......................... $33,754,710 $11,530,779 $1,429,195
=========== =========== ==========
</TABLE>
- ------
(a) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements.
-24-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GROWTH & EMERGING GOVERNMENT &
INCOME EQUITY GROWTH BALANCED CORPORATE BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------ --------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1995 1995 1995
------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $ 1,362,145 $ 537,567 $ 2,989,447 $10,189,381
Dividend income......... 6,932,220 849,061 1,397,318
Income from securities
lending................ 30,650 80,366 12,943 52,249
----------- ----------- ----------- -----------
Total Income.......... 8,325,015 1,466,994 4,399,708 10,241,630
----------- ----------- ----------- -----------
EXPENSES:
Investment advisory
fees................... 1,736,792 962,984 775,992 660,877
Administration fees..... 631,921 257,222 207,055 293,945
Distribution and
services fees--Investor
A Shares............... 62,142 40,545 23,011 15,376
Distribution and
services fees--Investor
B Shares............... 2,730 1,821 126 324
Administrative services
fees--Institutional
Shares................. 83,607 30,538 84,400 20,784
Custodian fees.......... 96,612 42,782 31,481 44,211
Legal and audit fees.... 70,737 29,523 20,493 33,434
Organization costs...... 4,009 5,110
Directors' fees and
expenses............... 13,759 5,888 4,555 6,327
Transfer agent fees..... 54,382 20,825 18,154 26,254
Registration and filing
fees................... 12,224 12,090 23,816 4,441
Printing costs.......... 42,178 16,628 12,876 19,509
Other................... 12,947 7,545 11,871 14,215
Expenses voluntarily
reduced................ (316,168) (128,825) (103,589) (147,087)
----------- ----------- ----------- -----------
Total Expenses........ 2,503,863 1,303,575 1,115,351 992,610
----------- ----------- ----------- -----------
Net Investment Income... 5,821,152 163,419 3,284,357 9,249,020
----------- ----------- ----------- -----------
REALIZED/UNREALIZED
GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains
(losses) from
investment
transactions........... 19,924,501 13,478,311 4,625,170 (1,171,676)
Change in unrealized
appreciation from
investments............ 61,722,240 8,231,506 14,959,325 14,042,027
----------- ----------- ----------- -----------
Net realized/unrealized
gains from investments. 81,646,741 21,709,817 19,584,495 12,870,351
----------- ----------- ----------- -----------
Change in net assets
resulting from
operations............. $87,467,893 $21,873,236 $22,868,852 $22,119,371
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
-25-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
MISSOURI SHORT-
U.S. GOVERNMENT TAX-EXEMPT INTERMEDIATE INTERNATIONAL
SECURITIES BOND MUNICIPAL EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------ --------------- -------------
FOR THE YEAR FOR THE SIX FOR THE PERIOD FOR THE YEAR
ENDED MONTHS ENDED JULY 10, 1995 ENDED
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30, NOVEMBER 30,
1995 1995 (B) 1995 (A) 1995
--------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $3,232,057 $1,950,416 $297,495
Dividend income......... $ 550,568
Foreign tax withholding. (59,020)
Income from securities
lending................ 19,824
---------- ---------- -------- ----------
Total Income.......... 3,251,881 1,950,416 297,495 491,548
---------- ---------- -------- ----------
EXPENSES:
Investment advisory
fees................... 208,179 156,100 38,167 317,919
Administration fees..... 92,584 69,496 13,879 63,584
Distribution and
services fees--Investor
A Shares............... 26,948 36,453 3,517
Distribution and
services fees--Investor
B Shares............... 112 1,452 271
Administrative services
fees--Institutional
Shares................. 1,219 4,305
Custodian fees.......... 14,417 10,773 2,375 55,398
Legal and audit fees.... 10,716 26,879 4,664 7,111
Organization costs...... 2,288 5,475
Directors' fees and
expenses............... 2,071 1,475 467 1,375
Transfer agent fees..... 8,229 9,262 1,471 5,026
Registration and filing
fees................... 6,275 4,167 3,378 170
Printing costs.......... 4,817 22,520 9,201 4,789
Other................... 7,720 4,464 1,986 2,589
Expenses voluntarily
reduced................ (46,322) (46,900) (45,081) (94,702)
---------- ---------- -------- ----------
Total Expenses........ 336,965 296,141 32,795 376,827
---------- ---------- -------- ----------
Net Investment Income... 2,914,916 1,654,275 264,700 114,721
---------- ---------- -------- ----------
REALIZED/UNREALIZED
GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN
CURRENCY:
Net realized gains from
investment
transactions........... 588,948 1,611 905,432
Net realized losses from
foreign currency
transactions........... (1,899,048)
Net change in unrealized
appreciation from
investments............ 2,891,528 1,343,976 224,139 4,500,515
Net change in unrealized
depreciation from
translation of assets
and liabilities in
foreign currencies..... (595,181)
---------- ---------- -------- ----------
Net realized/unrealized
gains from investments
and foreign currency... 3,480,476 1,345,587 224,139 2,911,718
---------- ---------- -------- ----------
Change in net assets
resulting from
operations............. $6,395,392 $2,999,862 $488,839 $3,026,439
========== ========== ======== ==========
</TABLE>
- ------
(a) Period from commencement of operations.
(b) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements.
-26-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TREASURY MONEY TAX-EXEMPT
MONEY MARKET PORTFOLIO MARKET PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------ -------------------------- ----------------------------------------
SIX MONTHS YEAR YEAR
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, MAY 31, MAY 31,
1995 1994 1995 1994 1995 (A) 1995 1994
-------------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment in-
come.............. $ 33,761,482 $ 21,243,492 $ 11,520,298 $ 8,401,250 $ 1,425,002 $ 3,002,806 $ 2,848,038
Net realized gains
(losses) from in-
vestment transac-
tions............. (6,772) 33,472 10,481 502 4,193 (102) 818
-------------- -------------- ------------ ------------ ------------ ------------ ------------
Change in net
assets resulting
from operations... 33,754,710 21,276,964 11,530,779 8,401,752 1,429,195 3,002,704 2,848,856
-------------- -------------- ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO
INVESTOR A SHARE-
HOLDERS
From net investment
income............ (2,861,060) (1,451,688) (132,984) (58,966) (81,409) (174,372) (147,398)
DISTRIBUTIONS TO
TRUST SHAREHOLDERS
From net investment
income............ (30,299,854) (19,520,111) (11,386,621) (8,342,284) (1,343,593) (2,828,434) (2,700,640)
DISTRIBUTIONS TO
INSTITUTIONAL
SHAREHOLDERS
From net investment
income............ (600,568) (271,693) (693)
-------------- -------------- ------------ ------------ ------------ ------------ ------------
Change in net
assets from
shareholder
distributions..... (33,761,482) (21,243,492) (11,520,298) (8,401,250) (1,425,002) (3,002,806) (2,848,038)
-------------- -------------- ------------ ------------ ------------ ------------ ------------
CAPITAL TRANSAC-
TIONS:
Proceeds from
shares issued..... 1,902,144,644 2,222,543,059 839,832,064 856,854,842 108,021,357 258,130,980 375,257,860
Dividends reinvest-
ed................ 11,376,917 6,754,896 3,013,118 1,405,163 216,746 412,936 270,252
Cost of shares
redeemed.......... (1,740,810,431) (2,294,337,015) (831,082,824) (872,361,831) (115,269,717) (289,306,657) (398,742,716)
-------------- -------------- ------------ ------------ ------------ ------------ ------------
Change in net
assets from share
transactions...... 172,711,130 (65,039,060) 11,762,358 (14,101,826) (7,031,614) (30,762,741) (23,214,604)
-------------- -------------- ------------ ------------ ------------ ------------ ------------
Change in net as-
sets.............. 172,704,358 (65,005,588) 11,772,839 (14,101,324) (7,027,421) (30,762,843) (23,213,786)
NET ASSETS:
Beginning of peri-
od................ 603,631,332 668,636,920 243,812,151 257,913,475 90,462,046 121,224,889 144,438,675
-------------- -------------- ------------ ------------ ------------ ------------ ------------
End of period...... $ 776,335,690 $ 603,631,332 $255,584,990 $243,812,151 $ 83,434,625 $ 90,462,046 $121,224,889
============== ============== ============ ============ ============ ============ ============
SHARE TRANSACTIONS:
Issued............. 1,902,144,644 2,222,543,059 839,832,064 856,854,842 108,021,357 258,130,980 375,257,860
Reinvested......... 11,376,917 6,754,896 3,013,118 1,405,163 216,746 412,936 270,252
Redeemed........... (1,740,810,431) (2,294,337,015) (831,082,824) (872,361,831) (115,269,717) (289,306,657) (398,742,716)
-------------- -------------- ------------ ------------ ------------ ------------ ------------
Change in shares... 172,711,130 (65,039,060) 11,762,358 (14,101,826) (7,031,614) (30,762,741) (23,214,604)
============== ============== ============ ============ ============ ============ ============
</TABLE>
- ------
(a) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements.
-27-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH & INCOME
EQUITY PORTFOLIO EMERGING GROWTH PORTFOLIO BALANCED PORTFOLIO
-------------------------- -------------------------- --------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1994 1995 1994 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss)................. $ 5,821,152 $ 4,415,320 $ 163,419 $ (153,485) $ 3,284,357 $ 2,713,558
Net realized gains
(losses) from
investment
transactions........... 19,924,501 2,839,354 13,478,311 7,166,109 4,625,170 (632,964)
Net change in unrealized
appreciation (deprecia-
tion) from investments. 61,722,240 (7,015,406) 8,231,506 (1,992,879) 14,959,325 (4,020,110)
------------ ------------ ------------ ----------- ------------ -----------
Change in net assets
resulting from
operations............. 87,467,893 239,268 21,873,236 5,019,745 22,868,852 (1,939,516)
------------ ------------ ------------ ----------- ------------ -----------
DISTRIBUTIONS TO
INVESTOR A SHAREHOLDERS
From net investment in-
come................... (333,955) (230,354) (224,231) (126,857)
In excess of net invest-
ment income............ (4,006)
From net realized gains
from investment trans-
actions................ (202,448) (134,535) (831,483) (632,621)
In excess of net
realized gains from
investment
transactions........... (1,280,737) (83,727) (26,576)
DISTRIBUTIONS TO
INVESTOR B SHAREHOLDERS
From net investment in-
come................... (2,563) (225)
In excess of net invest-
ment income............ (31)
DISTRIBUTIONS TO TRUST
SHAREHOLDERS
From net investment in-
come................... (5,053,238) (3,671,505) (2,182,251) (1,951,746)
In excess of net invest-
ment income............ (60,612)
From net realized gains
from investment trans-
actions................ (2,589,698) (2,899,332) (5,902,352) (6,533,488)
In excess of net
realized gains from
investment
transactions........... (27,600,831) (864,705) (908,621)
DISTRIBUTIONS TO
INSTITUTIONAL
SHAREHOLDERS
From net investment in-
come................... (431,396) (222,645) (790,342) (453,392)
In excess of net invest-
ment income............ (5,175)
From net realized gains
from investment trans-
actions................ (241,715) (432,261)
------------ ------------ ------------ ----------- ------------ -----------
Change in net assets
from shareholder
distributions.......... (8,924,837) (36,039,939) (7,166,096) (8,114,541) (3,197,049) (3,467,192)
------------ ------------ ------------ ----------- ------------ -----------
CAPITAL TRANSACTIONS:
Proceeds from shares is-
sued................... 52,046,659 98,775,512 70,516,196 46,597,083 26,225,962 49,334,814
Dividends reinvested.... 7,546,386 32,514,193 5,971,760 6,619,844 3,130,438 3,438,941
Cost of shares redeemed. (61,695,190) (69,220,929) (12,457,399) (7,931,613) (26,478,191) (23,735,092)
------------ ------------ ------------ ----------- ------------ -----------
Change in net assets
from share
transactions........... (2,102,145) 62,068,776 64,030,557 45,285,314 2,878,209 29,038,663
------------ ------------ ------------ ----------- ------------ -----------
Change in net assets.... 76,440,911 26,268,105 78,737,697 42,190,518 22,550,012 23,631,955
NET ASSETS:
Beginning of period..... 276,195,616 249,927,511 94,222,449 52,031,931 95,329,664 71,697,709
------------ ------------ ------------ ----------- ------------ -----------
End of period........... $352,636,527 $276,195,616 $172,960,146 $94,222,449 $117,879,676 $95,329,664
============ ============ ============ =========== ============ ===========
SHARE TRANSACTIONS:
Issued.................. 3,553,184 7,590,496 5,411,069 3,974,828 2,500,588 4,952,221
Reinvested.............. 558,779 2,513,612 549,194 581,701 299,781 347,402
Redeemed................ (4,212,791) (5,342,883) (975,925) (666,320) (2,584,883) (2,403,419)
------------ ------------ ------------ ----------- ------------ -----------
Change in shares........ (100,828) 4,761,225 4,984,338 3,890,209 215,486 2,896,204
============ ============ ============ =========== ============ ===========
</TABLE>
See notes to financial statements.
-28-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GOVERNMENT & CORPORATE U.S. GOVERNMENT MISSOURI TAX-EXEMPT
BOND PORTFOLIO SECURITIES PORTFOLIO BOND PORTFOLIO
--------------------------- -------------------------- ---------------------------------------
YEAR YEAR YEAR YEAR SIX MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, MAY 31, MAY 31,
1995 1994 1995 1994 1995 (A) 1995 1994
------------- ------------ ------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income... $ 9,249,020 $ 9,270,495 $ 2,914,916 $ 2,758,047 $ 1,654,275 $ 3,690,016 $ 3,430,005
Net realized gains
(losses) from
investment
transactions........... (1,171,676) (936,175) 588,948 (439,496) 1,611 (190,330) 51,067
Net change in unrealized
appreciation
(depreciation) from
investments............ 14,042,027 (12,940,985) 2,891,528 (3,712,533) 1,343,976 2,083,405 (3,036,614)
------------- ------------ ----------- ----------- ----------- ----------- ------------
Change in net assets
resulting from
operations............. 22,119,371 (4,606,665) 6,395,392 (1,393,982) 2,999,862 5,583,091 444,458
------------- ------------ ----------- ----------- ----------- ----------- ------------
DISTRIBUTIONS TO
INVESTOR A SHAREHOLDERS
From net investment in-
come................... (309,012) (282,702) (543,517) (586,428) (565,623) (1,301,629) (1,361,135)
From net realized gains
from investment trans-
actions................ (19,180) (113,792)
In excess of net
realized gains from
investment
transactions........... (22,888) (156,568)
DISTRIBUTIONS TO
INVESTOR B SHAREHOLDERS
From net investment in-
come................... (1,688) (603) (5,588) (593)
DISTRIBUTIONS TO TRUST
SHAREHOLDERS
From net investment in-
come................... (8,521,373) (8,665,397) (2,346,666) (2,168,037) (1,083,064) (2,387,794) (2,068,871)
From net realized gains
from investment trans-
actions................ (31,970) (150,314)
In excess of net
realized gains from
investment
transactions........... (944,526) (603,954)
DISTRIBUTIONS TO
INSTITUTIONAL
SHAREHOLDERS
From net investment in-
come................... (416,947) (322,395) (24,130) (3,582)
------------- ------------ ----------- ----------- ----------- ----------- ------------
Change in net assets
from shareholder
distributions.......... (9,249,020) (10,237,908) (2,914,916) (3,518,569) (1,654,275) (3,741,166) (3,694,112)
------------- ------------ ----------- ----------- ----------- ----------- ------------
CAPITAL TRANSACTIONS:
Proceeds from shares is-
sued................... 22,004,332 39,076,048 12,388,111 13,211,572 8,449,317 13,215,405 40,823,723
Dividends reinvested.... 6,496,071 7,613,415 2,029,261 2,568,737 610,700 1,366,231 1,301,345
Cost of shares redeemed. (42,323,482) (41,547,215) (6,345,525) (12,708,157) (6,221,755) (23,338,004) (19,212,701)
------------- ------------ ----------- ----------- ----------- ----------- ------------
Change in net assets
from share
transactions........... (13,823,079) 5,142,248 8,071,847 3,072,152 2,838,262 (8,756,368) 22,912,367
------------- ------------ ----------- ----------- ----------- ----------- ------------
Change in net assets.... (952,728) (9,702,325) 11,552,323 (1,840,399) 4,183,849 (6,914,443) 19,662,713
NET ASSETS:
Beginning of period..... 143,708,754 153,411,079 42,847,930 44,688,329 68,747,663 75,662,106 55,999,393
------------- ------------ ----------- ----------- ----------- ----------- ------------
End of period........... $ 142,756,026 $143,708,754 $54,400,253 $42,847,930 $72,931,512 $68,747,663 $ 75,662,713
============= ============ =========== =========== =========== =========== ============
SHARE TRANSACTIONS:
Issued.................. 2,156,859 3,777,097 1,156,552 1,245,060 735,228 1,199,549 3,503,550
Reinvested.............. 646,557 748,871 193,708 241,419 53,264 124,846 111,889
Redeemed................ (4,153,696) (4,026,090) (599,690) (1,212,717) (540,692) (2,158,695) (1,668,248)
------------- ------------ ----------- ----------- ----------- ----------- ------------
Change in shares........ (1,350,280) 499,878 750,570 273,762 247,800 (834,300) 1,947,191
============= ============ =========== =========== =========== =========== ============
</TABLE>
- ------
(a) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements.
-29-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
MUNICIPAL PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO
------------------- ---------------------------------
FOR THE PERIOD YEAR APRIL 4,
JULY 10, 1995 ENDED 1994 TO
TO NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 (A) 1995 1994 (A)
------------------- --------------- ---------------
<S> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income... $ 264,700 $ 114,721 $ 25,256
Net realized gains
(losses) from
investment
transactions........... 905,432 (145,743)
Net realized gains
(losses) from foreign
currency transactions.. (1,899,048) 30,349
Net change in unrealized
appreciation
(depreciation) from
investments............ 224,139 4,500,515 (949,983)
Change in unrealized
appreciation
(depreciation) from
translation of assets
and liabilities in
foreign currencies..... (595,181) 493,181
----------- --------------- ---------------
Change in net assets
resulting from
operations.............. 488,839 3,026,439 (546,940)
----------- --------------- ---------------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS
From net realized gains
from investment
transactions........... (261)
Tax return of capital... (1,179)
DISTRIBUTIONS TO TRUST
SHAREHOLDERS
From net investment
income................. (264,700)
From net realized gains
from investment
transactions........... (7,793)
Tax return of capital... (35,169)
DISTRIBUTIONS TO
INSTITUTIONAL
SHAREHOLDERS
From net realized gains
from investment
transactions........... (71)
Tax return of capital... (318)
----------- --------------- ---------------
Change in net assets from
shareholder
distributions........... (264,700) (44,791)
----------- --------------- ---------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 23,945,082 16,109,115 25,487,536
Dividends reinvested.... 9,378 28,077
Cost of shares redeemed. (424,913) (3,928,946) (205,993)
----------- --------------- ---------------
Change in net assets from
share transactions...... 23,529,547 12,208,246 25,281,543
----------- --------------- ---------------
Change in net assets..... 23,753,686 15,189,894 24,734,603
NET ASSETS:
Beginning of period..... 24,734,603
----------- --------------- ---------------
End of period........... $23,753,686 $ 39,924,497 $ 24,734,603
=========== =============== ===============
SHARE TRANSACTIONS:
Issued.................. 2,399,958 1,588,686 2,514,811
Reinvested.............. 938 2,857
Redeemed................ (42,604) (386,418) (20,012)
----------- --------------- ---------------
Change in shares......... 2,358,292 1,205,125 2,494,799
=========== =============== ===============
</TABLE>
- ------
(a)Period from commencement of operations.
See notes to financial statements.
-30-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------- -----------
<S> <C> <C>
ASSET BACKED SECURITIES (7.9%):
Finance (7.9%):
15,000,000 New Center Asset
Trust, 5.75%,
1/19/96............. $14,882,604
22,755,000 Ciesco, Inc., 5.73%,
12/8/95............. 22,729,647
24,203,000 Delaware Funding,
5.73%, 12/1/95...... 24,203,000
-----------
Total Asset Backed Securities 61,815,251
-----------
COMMERCIAL PAPER (74.9%):
Agricultural Services (2.4%):
18,893,000 Cargill, Inc. 5.85%,
12/1/95............. 18,893,000
-----------
Appliances (1.9%):
15,079,000 Whirlpool Corp.,
5.77%, 12/29/95..... 15,011,329
-----------
Automotive (5.3%):
25,000,000 Ford Motor Credit
Corp., 5.74%,
12/20/95............ 24,924,264
9,111,000 General Motors
Acceptance Corp.,
5.77%, 12/15/95..... 9,090,556
7,000,000 General Motors
Acceptance Corp.,
5.70% 2/16/96....... 6,914,658
-----------
40,929,478
-----------
Banking (6.1%):
25,000,000 Bank of New York,
5.74%, 12/18/95..... 24,932,236
22,500,000 Republic Bank of New
York, 5.62%, 1/5/96. 22,377,062
-----------
47,309,298
-----------
Beverages (1.6%):
12,500,000 PepsiCo, 5.63%,
5/10/96............. 12,185,267
-----------
Computers (2.8%):
22,000,000 Intel Corp., 5.70%,
12/4/95............. 21,989,550
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------- ------------
<S> <C> <C>
COMMERCIAL PAPER, CONTINUED:
Electrical & Electronic (3.7%):
11,000,000 CSC Enterprises,
5.72%, 12/4/95...... $ 10,994,757
17,710,000 CSC Enterprises,
5.80%, 1/26/96...... 17,550,217
------------
28,544,974
------------
Finance (12.9%):
25,000,000 American Express
Credit, 5.70%,
12/13/95............ 24,952,500
30,000,000 General Electric
Capital, 5.77%,
12/14/95............ 29,937,492
15,370,000 International Lease
Finance, 5.73%,
12/1/95............. 15,370,000
15,000,000 Sanwa Business
Credit, 5.82%,
12/20/95............ 14,953,925
15,420,000 Sanwa Business
Credit, 5.92%,
1/29/96............. 15,270,390
------------
100,484,307
------------
Financial Services (2.9%):
22,500,000 Morgan Stanley,
5.75%, 1/29/96...... 22,287,969
------------
Food Processing (2.5%):
19,400,000 Philip Morris Co.,
5.75%, 12/13/95..... 19,362,817
------------
Greeting Cards (3.5%):
13,000,000 American Greetings,
5.74%, 12/20/95..... 12,960,617
14,000,000 American Greetings,
5.73%, 12/28/95..... 13,939,835
------------
26,900,452
------------
Insurance (6.4%):
15,000,000 A. I. G. Funding,
5.73%, 12/12/95..... 14,973,737
34,950,000 Prudential Funding
Corp., 5.90%,
12/1/95............. 34,950,000
------------
49,923,737
------------
</TABLE>
Continued
-31-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ---------------------- --------------------- -----------
<S> <C> <C>
COMMERCIAL PAPER, CONTINUED:
Investment Co. (1.7%):
13,000,000 Weyerhaeuser
Mortgage, 5.75%,
12/14/95............ $12,973,007
-----------
Oil & Gas Exploration (6.4%):
15,000,000 Pemex (LOC: Swiss
Bank), 5.71%,
12/4/95............. 14,992,862
10,000,000 Pemex (LOC: Swiss
Bank), 5.75%,
12/5/95............. 9,993,611
25,000,000 Texaco Corp., 5.70%,
12/29/95............ 24,889,167
-----------
49,875,640
-----------
Printing & Publishing (2.8%):
13,100,000 McGraw-Hill, 5.68%,
12/18/95............ 13,064,863
9,000,000 McGraw-Hill, 5.48%,
4/30/96............. 8,793,319
-----------
21,858,182
-----------
Restaurants (1.2%):
9,661,000 McDonald's Corp.,
5.72%, 12/7/95...... 9,651,790
-----------
Retail Stores (4.9%):
25,409,000 Sears Roebuck
Acceptance Corp.,
5.76%, 12/20/95..... 25,331,757
12,571,000 Wal-Mart Stores,
5.70%, 12/18/95..... 12,537,163
-----------
37,868,920
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------- -----------
<S> <C> <C>
COMMERCIAL PAPER, CONTINUED:
Toys, Games & Children Vehicles (2.6%):
6,800,000 Hasbro, Inc., 5.72%,
12/19/95............ $ 6,780,552
13,000,000 Hasbro, Inc., 5.63%,
12/20/95............ 12,961,372
-----------
19,741,924
-----------
Transportation & Shipping (1.9%):
15,000,000 Matson Navigation,
5.75%, 12/6/95...... 14,988,021
-----------
Utilities--Gas & Electric (1.4%):
11,000,000 Florida Power Corp.,
5.76%, 12/11/95..... 10,982,400
-----------
Total Commercial Paper 581,762,062
-----------
CORPORATE BONDS (13.6%):
Automotive (0.6%):
5,000,000 Ford Motor Credit
Co., 8.88%, 8/1/96.. 5,094,310
-----------
Banking (6.6%):
15,000,000 Huntington Bank,
5.77%*, 12/2/96..... 14,991,922
21,295,000 NationsBank Corp.,
5.38%, 12/1/95...... 21,295,000
7,000,000 NationsBank Corp.,
5.83%, 12/15/95..... 7,000,000
7,900,000 Wachovia Bank Notes,
4.85%, 2/16/96...... 7,882,474
-----------
51,169,396
-----------
</TABLE>
Continued
-32-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------- -----------
<S> <C> <C>
CORPORATE BONDS, CONTINUED:
Financial Services (3.8%):
9,500,000 CIT Group Holdings,
5.88%, 12/1/95...... $ 9,500,000
20,000,000 Merrill Lynch,
5.86%*, 6/17/96..... 20,000,000
-----------
29,500,000
-----------
Telecommunications (2.6%):
20,000,000 A T & T Capital,
5.79%*, 12/15/95.... 20,000,000
-----------
Total Corporate Bonds 105,763,706
-----------
MEDIUM TERM NOTE (2.4%):
Automotive (0.5%):
4,000,000 Ford Motor Credit
Corp., 6.35%,
12/11/95............ $ 3,999,856
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------- ------------
<S> <C> <C>
MEDIUM TERM NOTE, CONTINUED:
Brokerage (1.9%):
15,000,000 Bear Stearns, 5.91%*,
3/28/96............. $ 15,000,000
------------
Total Medium Term Note 18,999,856
------------
U.S. GOVERNMENT AGENCIES (3.9%):
Federal Farm Credit Bank:
20,000,000 5.63%, 3/1/96........ 20,000,000
Student Loan Marketing Assoc.:
10,000,000 5.69%*, 12/20/96..... 10,000,000
------------
Total U.S. Government Agencies 30,000,000
------------
Total (Cost--$798,340,875)(a) $798,340,875
============
</TABLE>
- ------
Percentages indicated are based on net assets of $776,335,690.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity agreements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at November 30, 1995.
See notes to financial statements.
-33-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------- ------------
<S> <C> <C>
U.S. TREASURY BILLS (88.3%):
4,771,000 12/7/95.............. $ 4,766,698
6,456,000 12/14/95............. 6,443,393
70,803,000 12/21/95............. 70,583,609
2,635,000 12/28/95............. 2,624,460
15,062,000 1/4/96............... 14,987,521
51,000,000 1/11/96.............. 50,692,432
23,589,000 1/18/96.............. 23,422,088
3,604,000 1/25/96.............. 3,574,365
18,417,000 2/8/96............... 18,230,546
12,000,000 2/15/96.............. 11,864,467
18,612,000 2/29/96.............. 18,364,927
------------
Total U.S. Treasury Bills 225,554,506
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------- ------------
<S> <C> <C>
U.S. TREASURY NOTES (12.0%):
10,800,000 4.63%, 2/15/96....... $ 10,775,083
20,000,000 4.63%, 2/29/96....... 19,955,185
------------
Total U.S. Treasury Notes 30,730,268
------------
Total (Cost--$256,284,774)(a) $256,284,774
============
</TABLE>
- ------
Percentages indicated are based on net assets of $255,584,990.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements.
-34-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ---------- --------------------- ----------
<S> <C> <C>
MUNICIPAL BONDS (99.5%):
California (1.2%):
1,000,000 California Higher
Education, 3.90%,
7/1/96**............ $1,000,000
----------
Colorado (2.4%):
1,970,000 Colorado Housing
Finance Authority,
4.10%*, 3/1/12...... 1,970,000
----------
Florida (5.0%):
2,000,000 Hillsborough County,
Industrial
Development
Authority, Pollution
Control Revenue,
Tampa Electric Co.,
Gannon, 3.70%*,
5/15/18............. 2,000,000
2,200,000 Pinellas County,
Educational
Facilities, 3.70%,
2/16/96**........... 2,200,000
----------
4,200,000
----------
Georgia (7.4%):
3,200,000 Georgia Gas
Authority, 3.80%,
2/21/96**........... 3,200,000
3,000,000 Private Colleges &
Universities, 3.90%,
12/15/95**.......... 3,000,000
----------
6,200,000
----------
Illinois (8.4%):
3,000,000 Chicago, O'Hare
International
Airport, 3.90%*,
12/1/17............. 3,000,000
1,000,000 Illinois Development
Finance Authority,
Series D, 3.75%*,
3/1/16.............. 1,000,000
3,000,000 Illinois State
Revenue Anticipation
Certificates, 4.50%,
5/10/96............. 3,008,990
----------
7,008,990
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ---------- --------------------- ----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Indiana (2.4%):
2,000,000 Indiana Health
Facilities,
Deaconess, 3.90%*,
1/1/22.............. $2,000,000
----------
Louisiana (2.3%):
1,900,000 Louisiana Public
Facilities, 3.70%*,
9/1/15.............. 1,900,000
----------
Michigan (5.3%):
2,400,000 Detroit, 3.65%*,
10/1/10............. 2,400,000
2,000,000 Kalamazoo, Tax
Anticipation Notes
6.00%, 12/31/95..... 2,002,673
----------
4,402,673
----------
Minnesota (6.5%):
3,000,000 Becker, Northern
States Power 3.65%,
3/25/96**........... 3,000,000
2,450,000 Minneapolis, 3.75%*,
3/1/11.............. 2,450,000
----------
5,450,000
----------
Missouri (24.0%):
1,300,000 Kansas City, 3.85%*,
4/15/15............. 1,300,000
1,600,000 Kansas City,
Industrial
Development
Authority, Hospital
Revenue, 3.85%*,
10/15/14............ 1,600,000
3,000,000 Missouri Health,
4.10%*, 12/1/19..... 3,000,000
</TABLE>
Continued
-35-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ---------- --------------------- -----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
3,500,000 Missouri State
Environmental
Improvement, Series
B, Energy Reserve
Authority, 4.00%,
12/1/95**........... $ 3,500,000
2,000,000 Missouri State Health
& Educational
Facilities
Authority, School
District Advance
Funding Program
Notes, Series E,
4.50%, 8/19/96...... 2,007,584
2,800,000 Missouri State Health
& Educational
Facilities Authority
Revenue, Barnes
Hospital Project,
3.55%*, 12/1/15..... 2,800,000
1,600,000 Missouri State Health
& Educational
Facilities Authority
Revenue, SSM Health
Care Project,
3.65%*, 6/1/06...... 1,600,000
1,300,000 Missouri State Health
& Educational
Facilities Authority
Revenue, Washington
University Project
3.55%*, 9/1/10...... 1,300,000
1,900,000 Missouri State Health
& Educational
Facilities Authority
Revenue, Washington
University, Series
B, 3.80%*, 3/1/17... 1,900,000
1,000,000 Monsanto County,
3.50%*, 6/1/23...... 1,000,000
-----------
20,007,584
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ---------- --------------------- ----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Montana (4.6%):
2,200,000 Forsyth, Pollution
Control Revenue,
Series B, Portland
General Electric,
3.60%*, 6/1/13...... $2,200,000
1,600,000 Forsyth Pollution
Control Revenue,
Series D, 3.60%*,
6/1/13.............. 1,600,000
----------
3,800,000
----------
North Carolina (3.8%):
3,200,000 North Carolina
Medical Care,
Community Hospital
Revenue, Series A,
3.75%*, 10/1/20..... 3,200,000
----------
Pennsylvania (8.5%):
1,200,000 Delaware County,
4.10%*, 12/1/18..... 1,200,000
2,900,000 Delaware County,
3.70%*, 12/1/18..... 2,900,000
3,000,000 Philadelphia,
Transportation
Notes, 4.50%,
6/27/96............. 3,009,080
----------
7,109,080
----------
Tennessee (1.2%):
1,000,000 Bradley County,
3.75%*, 11/1/17..... 1,000,000
----------
</TABLE>
Continued
-36-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ---------- --------------------- -----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Texas (15.0%):
1,000,000 Angelina & Neches
River Authority,
3.85%*, 5/1/14...... $ 1,000,000
2,000,000 Angelina & Neches
River Authority,
Solid Waste Revenue,
1984 E, 3.85%*,
5/1/14.............. 2,000,000
3,300,000 North Central Texas
Health, 3.90%*,
10/1/15............. 3,300,000
1,000,000 Harris County, Health
Facilities Revenue,
Methodist Hospital,
3.80%*, 12/1/25..... 1,000,000
1,000,000 Harris County, Health
Facilities Revenue,
St. Lukes Episcopal,
Series B, 3.80%*,
2/15/16............. 1,000,000
2,200,000 Port Corpus Christi,
Nueces County
Marine, Reynolds
Metals Co., 3.80%*,
9/1/14.............. 2,200,000
2,000,000 Texas State Tax &
Revenue Anticipation
Notes, 4.75%,
8/30/96............. 2,009,330
-----------
12,509,330
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ---------- --------------------- -----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Virginia (1.5%):
1,250,000 Peninsula Port
Authority Revenue--
Shell Co., 3.75%*,
12/1/05............. $ 1,250,000
-----------
Total Municipal Bonds 83,007,657
-----------
INVESTMENT COMPANIES (0.2%):
133,000 Federated Tax-Free
Trust Mutual Fund... 133,000
42,000 Nuveen Tax-Exempt
Money Market Fund... 42,000
-----------
Total Investment Companies 175,000
-----------
Total (Cost--$83,182,657)(a) $83,182,657
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $83,434,625.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity agreements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at November 30, 1995.
** Put and demand features exist allowing the Fund to require the repurchase
of the investment within variable time periods ranging from daily, weekly,
monthly or semiannually. Maturity date reflects the next put date.
See notes to financial statements.
-37-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- -------------------------------- ------------
<S> <C> <C>
COMMERCIAL PAPER (4.3%):
Insurance (4.3%):
15,050,000 Prudential Funding Corp.
5.90%, 12/1/95................. $ 15,050,000
------------
Total Commercial Paper 15,050,000
------------
COMMON STOCKS (93.7%):
Aerospace (1.9%):
90,000 Lockheed Martin Corp............ 6,603,750
------------
Airlines (2.3%):
330,000 Southwest Airlines.............. 8,250,000
------------
Banking (3.5%):
104,600 Chemical Bank(c)................ 6,276,000
86,550 NationsBank Corp.(c)............ 6,177,506
------------
12,453,506
------------
Banking & Financial Services (1.7%):
100,000 Crestar Financial Corp.(c) 6,100,000
------------
Beverages--Domestic (2.2%):
140,000 PepsiCo, Inc.................... 7,735,000
------------
Chemicals (3.0%):
130,000 Morton International, Inc....... 4,501,250
100,000 W.R. Grace & Co................. 6,075,000
------------
10,576,250
------------
Containers & Packaging (0.6%):
43,552 Avery Dennison.................. 2,074,164
------------
Electrical Equipment (4.5%):
130,000 Duracell International, Inc.(c). 6,890,000
135,000 General Electric Co............. 9,078,750
------------
15,968,750
------------
Financial Services (5.5%):
60,000 Federal National Mortgage
Association.................... 6,570,000
150,000 First USA, Inc.(c).............. 6,881,250
124,935 PMI Group(c).................... 5,934,413
------------
19,385,663
------------
Food Processing (4.3%):
225,000 H.J. Heinz Co................... 7,171,875
130,000 IBP, Inc........................ 8,125,000
------------
15,296,875
------------
Leasing (1.7%):
235,000 Consolidated Freightways(c)..... 6,168,750
------------
Machinery & Equipment (2.6%):
510,000 McDermott International,
Inc.(c)........................ 9,243,750
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------- ------------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Manufacturing--Consumer Goods (3.8%):
220,000 Newell Co................... $ 5,802,500
337,363 Whitman Corp................ 7,421,986
------------
13,224,486
------------
Natural Resources (0.7%):
90,000 Cinergy Corp................ 2,655,000
------------
Oil & Gas Equipment/Services (4.4%):
421,300 Dresser Industries, Inc..... 9,953,213
90,000 Schlumberger Limited........ 5,715,000
------------
15,668,213
------------
Oil & Gas Exploration Products & Services (6.5%):
212,000 Murphy Oil Corp............. 8,347,500
150,000 Union Pacific Resources..... 3,487,500
575,000 Union Texas Petroleum
Holdings, Inc.(c).......... 11,068,750
------------
22,903,750
------------
Paper Products (0.0%):
750 Weyerhaeuser................ 33,938
------------
Pharmaceuticals (13.9%):
85,400 Abbott Laboratories......... 3,469,375
70,000 American Home
Products Corp.............. 6,387,500
88,058 Bristol Myers Squibb Co..... 7,066,654
80,000 Eli Lilly & Co.............. 7,960,000
150,000 Pfizer, Inc................. 8,700,000
138,678 Schering Plough(c).......... 7,956,650
140,000 SmithKline Beecham
PLC ADR(c)................. 7,455,000
------------
48,995,179
------------
Retail Stores (9.0%):
165,000 Dillard Department Stores,
Inc., Class A.............. 4,764,375
200,000 Home Depot, Inc............. 8,875,000
150,500 May Department Stores Co.... 6,565,563
250,000 Toys R Us, Inc.(b).......... 5,812,500
236,363 Wal-Mart Stores, Inc........ 5,672,712
------------
31,690,150
------------
Technology (4.8%):
90,000 Automatic Data
Processing, Inc............ 7,166,250
40,000 Microsoft(b)................ 3,485,000
100,000 Motorola, Inc............... 6,125,000
------------
16,776,250
------------
Tobacco (2.0%):
80,000 Philip Morris, Inc.......... 7,020,000
------------
Transportation & Shipping (3.9%):
80,000 CSX Corp.................... 7,010,000
100,000 Union Pacific Corp.(b)(c)... 6,775,000
------------
13,785,000
------------
</TABLE>
Continued
-38-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------- ------------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities--Electric (1.6%):
140,000 PacifiCorp(c)......... $ 2,747,500
70,000 Union Electric Co.(c). 2,808,750
------------
5,556,250
------------
Utilities--Oil & Gas (2.3%):
272,100 Vastar Resources...... 7,992,937
------------
Utilities--Telecommunications (4.1%):
120,000 A T & T Corp.......... 7,920,000
150,000 GTE Corp.............. 6,393,750
------------
14,313,750
------------
Utilities--Water (0.8%):
110,000 Teco Energy, Inc.(c).. 2,667,500
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- --------------------- ------------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Wholesale Distribution (2.1%):
239,935 Sysco Corp........... $ 7,348,009
------------
Total Common Stocks 330,486,870
------------
INVESTMENT COMPANIES (1.5%):
5,168,000 Cash Assets Trust
Money Market........ 5,168,000
------------
Total Investment Companies 5,168,000
------------
Total (Cost--$290,644,081)(a) $350,704,870
============
</TABLE>
- ------
Percentages indicated are based on net assets of $352,636,527.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $1,125,993. Cost for federal income tax purposes differs
from value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................... $67,417,299
Unrealized depreciation.................... (8,482,503)
-----------
Net unrealized appreciation................ $58,934,796
===========
</TABLE>
(b) Represents non-income producing securities.
(c) A portion of this security was loaned at November 30, 1995.
See notes to financial statements.
-39-
<PAGE>
THE ARCH FUND, INC.
EMERGING GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------- ------------
<S> <C> <C>
COMMERCIAL PAPER (6.1%):
Insurance (6.1%):
10,516,000 Lincoln National, 5.90%,
12/1/95.................... $ 10,516,000
------------
Total Commercial Paper 10,516,000
------------
COMMON STOCKS (95.4%):
Airlines (1.8%):
162,000 Mesa Airlines, Inc.(b)(c)... 1,468,125
114,800 Skywest, Inc................ 1,578,500
------------
3,046,625
------------
Banking & Financial Services (5.6%):
90,000 Charter One Financial, Inc.. 2,880,000
34,775 Dauphin Deposit Corp........ 1,069,331
67,000 Standard Federated Bank..... 2,571,125
100,000 Union Planters Corp.(c)..... 3,150,000
------------
9,670,456
------------
Beverages--Foreign (1.9%):
100,000 Canadaigua Wine, Inc.,
Class A(b)(c).............. 3,350,000
------------
Chemicals (3.8%):
100,000 Airgas, Inc.(b)(c).......... 2,800,000
140,000 Hanna (M.A.) Co.(c)......... 3,762,500
------------
6,562,500
------------
Commercial Services (1.0%):
142,800 Barefoot, Inc............... 1,642,200
------------
Computers (2.8%):
107,800 Norand Corp.(b)(c).......... 1,590,050
175,000 Quantum Corp.(b)(c)......... 3,281,250
------------
4,871,300
------------
Computer Software (4.2%):
50,000 Active Voice Corp.(b)....... 1,350,000
110,000 Avid Technology, Inc.(b)(c). 4,358,750
101,700 Mysoftware Co.(b)........... 1,525,500
------------
7,234,250
------------
Consumer Goods & Services (2.4%):
100,000 Department 56, Inc.(b)(c)... 4,125,000
------------
Electrical Equipment (1.9%):
55,000 Hubbell, Inc., Class B...... 3,361,875
------------
Electronics (0.8%):
62,000 Three-Five Systems,
Inc.(b)(c)................. 1,340,750
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------------------------- ------------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Financial Services (9.1%):
62,000 Aames Financial Corp.(c)..... $ 1,968,500
85,000 Advanta Corp., Class B....... 3,293,750
75,000 Finova Group, Inc............ 3,637,500
50,000 GMAC Investment Corp.(c)..... 2,337,500
78,600 Union Acceptance(b).......... 1,198,650
102,400 United Companies Financial
Corp.(c).................... 3,379,200
------------
15,815,100
------------
Food Processing (2.7%):
139,000 Hormel Foods Corp.(c)........ 3,405,500
104,000 J & J Snack Foods Corp.(b)... 1,274,000
------------
4,679,500
------------
Food Products (1.6%):
115,000 Performance Food Group(b)(c). 2,731,250
------------
Health Care (3.0%):
80,000 Health Care &
Retirement(b)(c)............ 2,680,000
205,032 Sun Health Care
Group, Inc.(b)(c)........... 2,537,271
------------
5,217,271
------------
Industrial Goods & Services (0.6%):
72,200 Zoltek Companies, Inc.(b)(c). 1,010,800
------------
Informational Services (3.2%):
92,000 Sungard Data Systems, Inc.(b) 2,645,000
100,000 Verifone, Inc.(b)............ 2,925,000
------------
5,570,000
------------
Insurance (2.0%):
80,000 NAC Re Corp.................. 2,640,000
53,000 Sphere Drake Holdings Ltd.... 761,875
------------
3,401,875
------------
Machinery & Equipment (3.3%):
105,200 Modine Manufacturing Co.(c).. 3,261,200
145,800 Titan Wheel International(c). 2,496,825
------------
5,758,025
------------
Manufacturing--Capital Goods (1.1%):
60,000 Holophane Corp.(b)........... 1,830,000
------------
Manufacturing--Consumer Goods (1.9%):
160,000 First Alert, Inc.(b)(c)...... 1,700,000
78,200 Rival Manufacturing Co. ..... 1,651,975
------------
3,351,975
------------
</TABLE>
Continued
-40-
<PAGE>
THE ARCH FUND, INC.
EMERGING GROWTH PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------------------------- ------------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Medical Equipment & Supplies (3.2%):
98,000 Fisher Scientific Intl.(c)... $ 3,197,250
100,000 Orthologic Corp.(b).......... 1,275,000
60,100 Resmed, Inc.(b).............. 856,425
16,000 Tecnol Medical Products,
Inc.(b)..................... 278,000
------------
5,606,675
------------
Medical Services (8.4%):
50,000 AHI Healthcare Systems,
Inc.(b)..................... 587,500
200,000 Beverly Enterprises,
Inc.(b)(c).................. 2,325,000
150,000 Charter MedicalGroup(b)(c)... 2,737,500
82,000 Emeritus Corp.(b)(c)......... 1,230,000
100,000 Living Centers of America(b). 3,137,500
137,550 Mid Atlantic Medical
Services(b)(c).............. 3,352,781
100,000 Sterling House Corp.(b)...... 1,112,500
------------
14,482,781
------------
Office/Business Equipment & Supplies (1.6%):
137,000 Nu-Kote Holding, Inc.,
Class A(b)(c)............... 2,705,750
------------
Oil/Gas--Equipment & Services (1.2%):
210,000 Nabors Industries, Inc.(b)... 2,073,750
------------
Oil & Gas Exploration Products & Services (4.0%):
77,100 Camco International, Inc..... 1,811,850
120,000 J. Ray McDermott, S.A.(b)(c). 1,905,000
170,000 Union Texas Petroleum
Holdings, Inc............... 3,272,500
------------
6,989,350
------------
Pharmaceuticals (4.5%):
125,000 Allergan..................... 3,875,000
90,000 Scherer RP Corp.(b)(c)....... 3,993,750
------------
7,868,750
------------
Printing & Publishing (1.2%):
180,000 K-111 Communications
Corp.(b)(c)................. 2,115,000
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------------------------- ------------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Restaurants (2.8%):
100,000 Morrison Restaurants, Inc.... $ 1,675,000
274,000 Ryan's Family Steak
Houses, Inc.(b)............. 2,020,750
105,000 Shoney's, Inc.(b)(c)......... 1,128,750
------------
4,824,500
------------
Retail Stores (5.2%):
133,200 Catherine Stores Corp.(b).... 1,082,250
70,000 Discount Auto Parts,
Inc.(b)(c).................. 1,942,500
120,000 Heilig-Meyers Co.(c)......... 2,430,000
120,000 Michaels Stores, Inc.(b)(c).. 1,980,000
75,000 Tractor Supply Co.(b)........ 1,500,000
------------
8,934,750
------------
Telecommunications (4.3%):
135,000 ARCH Communications
Group, Inc.(b)(c)........... 3,391,875
89,500 Palmer Resources, Inc.(b)(c). 1,901,875
105,000 U.S. Order, Inc.(b)(c)....... 2,060,625
------------
7,354,375
------------
Telecommunications--Services & Equipment (1.5%):
158,300 Colonial Data
Technologies Corp.(b)(c).... 2,513,013
------------
Trucking & Leasing (2.8%):
100,000 American Freightways
Corp.(b).................... 1,362,500
180,000 TNT Freightways.............. 3,555,000
------------
4,917,500
------------
Total Common Stocks 164,956,946
------------
INVESTMENT COMPANIES (0.6%):
1,000,000 Cash Assets Trust
Money Market................ 1,000,000
------------
Total Investment Companies 1,000,000
------------
Total (Cost--$168,403,331)(a) $176,472,946
============
</TABLE>
- ------
Percentages indicated are based on net assets of $172,960,146.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $537,070. Cost for federal income tax purposes differs
from value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $21,282,594
Unrealized depreciation......... (13,750,049)
-----------
Net unrealized appreciation..... $ 7,532,545
===========
</TABLE>
(b) Represents non-income producing securities.
(c) A portion of this security was loaned at November 30, 1995.
See notes to financial statements.
-41-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------- ------------
<S> <C> <C>
COMMERCIAL PAPER (8.1%):
Insurance (8.1%):
9,526,000 Lincoln National,
5.90%, 12/1/95.......... $ 9,526,000
------------
Total Commercial Paper 9,526,000
------------
COMMON STOCKS (55.0%):
Aerospace (1.3%):
20,000 Lockheed Martin Corp..... 1,467,500
------------
Airlines (1.2%):
55,000 Southwest Airlines....... 1,375,000
------------
Banking (2.2%):
20,000 Chemical Bank............ 1,200,000
18,450 Nations BankCorp.(c)..... 1,316,869
------------
2,516,869
------------
Banking & Financial Services (1.0%):
20,000 Crestar Financial Corp... 1,220,000
------------
Beverages (1.4%):
30,000 PepsiCo, Inc............. 1,657,500
------------
Chemicals (1.5%):
25,000 Morton International,
Inc..................... 865,625
15,000 W.R. Grace & Co.......... 911,250
------------
1,776,875
------------
Containers & Packaging (0.2%):
4,626 Avery Dennison........... 220,313
------------
Electrical Equipment (2.5%):
20,000 Duracell International,
Inc..................... 1,060,000
27,640 General Electric Co...... 1,858,790
------------
2,918,790
------------
Financial Services (3.1%):
13,000 Federal National Mortgage
Assoc................... 1,423,500
20,000 First USA, Inc........... 917,500
28,777 PMI Group................ 1,366,908
------------
3,707,908
------------
Food Processing (2.4%):
38,100 H.J. Heinz Co............ 1,214,437
25,000 IBP, Inc................. 1,562,500
------------
2,776,937
------------
Leasing (1.0%):
45,000 Consolidated Freightways. 1,181,250
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------------- ------------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Machinery & Equipment (1.5%):
100,000 McDermott International, Inc... $ 1,812,500
------------
Manufacturing--Consumer Goods (2.3%):
50,000 Newell Co...................... 1,318,750
62,480 Whitman Corp................... 1,374,560
------------
2,693,310
------------
Natural Resources (0.4%):
15,000 Cinergy Corp................... 442,500
------------
Oil & Gas Equipment/Services (2.3%):
75,000 Dresser Industries, Inc........ 1,771,875
15,500 Schlumberger Limited........... 984,250
------------
2,756,125
------------
Oil & Gas Exploration (3.7%):
35,300 Murphy Oil Corp................ 1,389,937
35,000 Union Pacific Resources(b)..... 813,750
115,000 Union Texas Petroleum
Holdings, Inc................. 2,213,750
------------
4,417,437
------------
Paper Products (0.0%):
250 Weyerhaueser Co................ 11,312
------------
Pharmaceuticals (8.1%):
17,200 Abbott Laboratories............ 698,750
10,000 American Home Products Corp.... 912,500
20,170 Bristol Myers Squibb Co........ 1,618,643
15,000 Eli Lilly & Co................. 1,492,500
28,824 Pfizer, Inc.................... 1,671,792
30,722 Schering Plough Corp........... 1,762,675
26,138 Smithkline Beecham PLC,
ADR(c)........................ 1,391,849
------------
9,548,709
------------
Retail Stores (5.7%):
45,000 Dillard Department Stores, Inc.
Class A....................... 1,299,375
35,000 Home Depot, Inc................ 1,553,125
29,500 May Department Stores Co....... 1,286,937
60,000 Toys R Us, Inc.(b)............. 1,395,000
50,893 Wal-Mart Stores, Inc........... 1,221,432
------------
6,755,869
------------
</TABLE>
Continued
-42-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------- ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Technology (3.2%):
17,528 Automatic Data Processing,
Inc.................. $ 1,395,667
10,000 Microsoft(b).......... 871,250
25,000 Motorola, Inc......... 1,531,250
------------
3,798,167
------------
Telecommunications (1.4%):
25,000 A T & T Corp.......... 1,650,000
------------
Tobacco (1.1%):
15,000 Philip Morris, Inc.... 1,316,250
------------
Transportation & Shipping (2.6%):
19,000 CSX Corp.............. 1,664,875
20,000 Union Pacific Corp.... 1,355,000
------------
3,019,875
------------
Utilities--Electric (1.0%):
30,000 PacifiCorp............ 588,750
15,000 Union Electric Co.(c). 601,875
------------
1,190,625
------------
Utilities--Oil & Gas (1.2%):
50,000 Vastar Resources...... 1,468,750
------------
Utilities--Telecommunications (1.1%):
30,000 GTE Corp.............. 1,278,750
------------
Utilities--Water (0.5%):
25,000 Teco Energy, Inc...... 606,250
------------
Wholesale Distribution (1.1%):
40,669 Sysco Corp............ 1,245,488
------------
Total Common Stocks 64,830,859
------------
CORPORATE BONDS (6.5%):
Financial Services (3.5%):
1,000,000 General Electric Capital
Corp., 8.75%,
11/26/96............. $ 1,028,300
1,000,000 General Motors Acceptance
Corp., 8.25%,
8/1/96............... 1,015,470
1,000,000 Merrill Lynch, 4.75%,
6/24/96(c)........... 995,450
1,000,000 U.S. West Capital
Funding, Inc., 8.00%,
10/15/96............. 1,018,100
------------
4,057,320
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- --------------------------- ------------
<S> <C> <C>
CORPORATE BONDS, CONTINUED:
Oil & Gas Exploration (2.2%):
1,000,000 B.P. America, Inc., 8.88%,
12/1/97................... $ 1,058,750
500,000 Exxon Capital Corp., 7.88%,
4/15/96................... 504,180
500,000 Exxon Capital Corp., 7.88%,
8/15/97................... 517,250
500,000 Shell Oil Co., 6.00%,
1/15/97(c)................ 501,875
------------
2,582,055
------------
Telecommunications (0.8%):
1,000,000 AT&T Corp., 4.50%,
2/15/96(c)................ 998,750
------------
Total Corporate Bonds 7,638,125
------------
MEDIUM TERM NOTES (1.7%):
2,000,000 Federal Home Loan
Bank, 5.35%, 2/7/01....... 1,974,920
------------
Total Medium Term Notes 1,974,920
------------
U.S. GOVERNMENT AGENCIES (17.5%):
Federal Farm Credit Bank:
3,200,000 7.61%, 3/16/98............. 3,218,624
Federal Home Loan Mortgage Corp.:
425,578 9.50%, 2/1/98.............. 440,737
323,936 7.00%, 3/1/98.............. 329,501
565,186 6.00%, 4/1/98.............. 566,067
642,592 6.50%, 4/1/98.............. 649,416
156,252 7.00%, 4/1/98.............. 158,937
2,000,000 6.91%, 6/20/05............. 2,061,840
1,000,000 7.23%, 6/23/05............. 1,019,240
707,785 6.50%, 4/1/08.............. 706,900
615,298 7.00%, 4/1/08.............. 623,371
898,975 6.50%, 1/1/09.............. 897,851
Federal National Mortgage Assoc.:
1,000,000 7.06%, 7/14/05............. 1,015,210
Government National Mortgage Assoc.:
436,858 7.00%, 7/15/09............. 444,363
499,204 6.50%, 10/20/10............ 495,770
17,760 8.50%, 6/15/17............. 18,554
468,285 8.00%, 7/15/22............. 484,820
760,541 7.00%, 11/15/22............ 762,914
769,796 7.50%, 3/15/23............. 786,393
13,702 8.50%, 3/15/23............. 14,315
</TABLE>
Continued
-43-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
413,132 7.50%, 4/15/23...................................... $ 422,039
744,291 8.50%, 8/15/24...................................... 777,546
891,018 8.50%, 9/15/24...................................... 930,829
261,274 8.50%, 1/15/25...................................... 272,948
250,141 8.50%, 2/15/25...................................... 261,317
443,098 8.50%, 3/15/25...................................... 462,895
270,860 8.50%, 4/15/25...................................... 282,962
507,073 8.00%, 8/15/25...................................... 524,977
24,962 7.50%, 9/15/25...................................... 25,500
1,932,382 7.50%, 10/15/25..................................... 1,974,044
----------
Total U.S. Government Agencies 20,629,880
----------
U.S. TREASURY BONDS (6.6%):
300,000 10.75%, 8/15/05(c).................................. 408,174
1,500,000 7.50%, 11/15/16(c).................................. 1,721,145
1,400,000 7.88%, 2/15/21(c)................................... 1,682,562
1,000,000 8.13%, 5/15/21(c)................................... 1,234,330
1,000,000 8.13%, 8/15/21...................................... 1,235,170
1,200,000 8.00%, 11/15/21(c).................................. 1,464,336
----------
Total U.S. Treasury Bonds 7,745,717
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
U.S. TREASURY NOTES (0.4%):
500,000 6.50%, 5/15/05(c)..................................... $ 526,290
------------
Total U.S. Treasury Notes 526,290
------------
INVESTMENT COMPANIES (3.4%):
4,000,000 Cash Assets Trust Money Market........................ 4,000,000
------------
Total Investment Companies 4,000,000
------------
Total (Cost--$105,814,406)(a) $116,871,791
============
</TABLE>
- ------
Percentages indicated are based on net assets of $117,879,676.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $372,635. Cost for federal income tax purposes differs
from value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.......... $13,039,181
Unrealized depreciation.......... (2,354,431)
-----------
Net unrealized appreciation...... $10,684,750
===========
</TABLE>
(b) Represents non-income producing securities.
(c) A portion of this security was loaned at November 30, 1995.
See notes to financial statements
-44-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT AND CORPORATE BOND PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------------ -----------
<S> <C> <C>
ASSET BACKED SECURITIES (0.1%):
178,793 General Motors Acceptance
Corp., 5.70%, 12/15/96....... $ 178,758
-----------
Total Asset Backed Securities 178,758
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS (0.2%):
269,341 Collateralized Mortgage
Securities Corp.,
8.25%, 6/20/96............... 269,920
-----------
Total Collateralized
Mortgage Obligations 269,920
-----------
CORPORATE BONDS (10.5%):
Financial Services (10.5%):
3,000,000 Associates Corp. N.A.,
6.75%, 7/15/97............... 3,052,500
4,000,000 Associates Corp. N.A.,
8.38%, 1/15/98............... 4,205,000
3,000,000 Ford Motor Credit Corp.,
9.05%, 5/8/98................ 3,217,500
1,014,000 General Electric Capital
Corp., 8.43%, 2/15/96........ 1,018,918
2,000,000 General Motors Acceptance
Corp., 7.75%, 1/17/97........ 2,045,000
1,500,000 U.S. West Capital,
8.73%, 12/12/95.............. 1,501,410
-----------
Total Corporate Bonds 15,040,328
-----------
U.S. GOVERNMENT AGENCIES (41.2%):
Federal Home Loan Bank:
4,000,000 7.89%, 12/5/97................ 4,006,440
Federal Home Loan Mortgage Corp.:
431,495 8.00%, 4/1/96 Pool # M9-0042.. 443,223
550,767 7.50%, 1/15/97 Pool # 1273-F.. 553,550
1,840,071 6.50%, 2/1/98 Pool # M9-0166.. 1,859,613
1,452,671 6.50%, 3/1/98 Pool # M1-7556.. 1,468,098
93,450 8.50%, 5/1/01 Pool # 20-0034.. 97,539
192,392 8.50%, 11/1/01 Pool # 20-0058. 198,764
126,692 8.00%, 3/1/02 Pool # 21-5507.. 129,859
36,693 8.00%, 3/1/02 Pool # 21-5727.. 37,610
200,976 7.50%, 4/1/02 Pool # 20-0070.. 204,304
103,961 8.00%, 5/1/02 Pool # 21-6910.. 106,560
10,928 8.00%, 5/1/02 Pool # 21-6925.. 11,201
13,826 8.00%, 6/1/02 Pool # 21-7366.. 14,172
411,570 8.00%, 6/1/02 Pool # 21-8101.. 421,859
111,011 8.00%, 6/1/02 Pool # 21-8582.. 113,786
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal Home Loan Mortgage Corp., continued:
22,797 8.00%, 6/1/02 Pool # 21-9187............................ $ 23,367
50,862 8.00%, 7/1/02 Pool # 21-7891............................ 52,133
273,163 8.00%, 7/1/02 Pool # 50-1214............................ 279,992
153,604 8.50%, 3/1/05 Pool # 38-0084............................ 158,691
13,678 8.50%, 4/1/05 Pool # 38-0085............................ 14,131
4,000,000 6.97%, 6/16/05.......................................... 4,140,520
3,500,000 6.91%, 6/20/05.......................................... 3,608,220
3,000,000 7.23%, 6/23/05.......................................... 3,057,720
1,000,000 7.46%, 8/3/05........................................... 1,033,900
93,048 8.50%, 9/1/05 Pool # 50-3592............................ 96,130
55,566 8.50%, 4/1/06 Pool # E0-0025............................ 57,909
2,798,081 8.00%, 4/1/23 Pool # C0-0225............................ 2,882,891
626,165 8.00%, 1/1/23 Pool # D2-9451............................ 645,144
Federal National Mortgage Assoc.:
1,653,148 6.00%, 11/1/00 Pool # 190070 1,643,329
3,000,000 7.13%, 7/6/05........................................... 3,053,850
3,788,366 8.00%, 7/1/24 Pool # 190264............................. 3,905,540
Federal National Mortgage Assoc. REMIC:
316,735 8.50%, 4/25/96
Pool # 1991-119J........................................ 316,760
633,834 8.50%, 5/25/97
Pool # 1992-65L......................................... 643,088
Government National Mortgage Assoc.:
55,039 9.50%, 2/15/01 Pool # 149206............................ 58,255
65,526 9.50%, 9/15/01 Pool # 290435............................ 69,355
247,312 8.00%, 1/15/02 Pool # 188653............................ 256,972
339,022 8.00%, 3/15/02 Pool # 199167 and 201708................. 352,264
234,917 8.00%, 4/15/02 Pool # 180980............................ 244,092
236,325 8.00%, 7/15/02 Pool # 209779............................ 245,556
112,256 9.50%, 10/15/02 Pool # 232514........................... 118,815
209,921 9.50%, 1/15/06 Pool # 298829............................ 222,186
233,855 8.00%, 5/15/06 Pool # 303851............................ 242,990
97,603 9.50%, 7/15/07 Pool # 331878............................ 103,306
506,348 8.00%, 11/15/07 Pool # 339329........................... 526,126
548,627 8.00%, 12/15/07 # 338551................................ 570,057
883,076 9.50%, 8/15/09 Pool # 400219............................ 934,674
256,946 9.50%, 9/15/09 Pool # 377317............................ 271,959
1,221,587 9.50%, 2/15/10 Pool # 392932............................ 1,292,965
58,104 8.00%, 5/15/10 Pool # 398424............................ 60,374
</TABLE>
Continued
-45-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------ -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
243,451 8.00%, 9/15/10 Pool # 419798... $ 252,960
1,923,816 8.00%, 11/15/10 Pool # 405524,
410294 and 414827.............. 1,998,960
2,927,112 8.50%, 4/15/17 Pool # 0212112.. 3,057,895
1,808,192 8.00%, 4/15/22 Pool # 0320818.. 1,872,039
4,173,517 7.50%, 1/15/23 Pool # 0331839.. 4,263,498
2,378,801 8.00%, 1/15/23 Pool # 0331841.. 2,462,797
1,239,396 7.50%, 4/15/23 Pool # 343195... 1,266,117
2,582,343 9.00%, 3/15/25 Pool # 404067... 2,725,173
-----------
Total U.S. Government Agencies 58,749,278
-----------
U.S. TREASURY BILLS (6.8%):
9,700,000 12/21/95(b).................... 9,668,413
-----------
Total U.S. Treasury Bills 9,668,413
-----------
U.S. TREASURY BONDS (25.8%):
5,300,000 12.75%, 11/15/10(b)............ 8,003,795
1,375,000 9.25%, 2/15/16(b).............. 1,852,221
2,516,000 7.25%, 5/15/16(b).............. 2,813,467
1,500,000 7.50%, 11/15/16(b)............. 1,721,145
1,675,000 8.75%, 5/15/17................. 2,168,371
2,865,000 8.88%, 8/15/17(b).............. 3,755,557
4,150,000 8.88%, 2/15/19(b).............. 5,468,123
4,000,000 8.13%, 8/15/19(b).............. 4,914,640
1,550,000 8.50%, 2/15/20(b).............. 1,977,304
3,183,000 8.75%, 8/15/20(b).............. 4,167,534
-----------
Total U.S. Treasury Bonds 36,842,157
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------------------------- ------------
<S> <C> <C>
U.S. TREASURY NOTES (14.5%):
350,000 7.50%, 5/15/02(b)............ $ 385,399
8,000,000 7.25%, 8/15/04(b)............ 8,794,640
1,800,000 7.88%, 11/15/04(b)........... 2,059,290
2,450,000 6.13%, 5/31/97............... 2,475,602
500,000 5.75%, 9/30/97(b)............ 503,305
5,200,000 6.13%, 5/15/98(b)............ 5,287,828
1,100,000 6.50%, 8/15/05(b)............ 1,158,080
------------
Total U.S. Treasury Notes 20,664,144
------------
INVESTMENT COMPANIES (0.1%):
166,700 Federated Money Market Trust. 166,700
------------
Total Investment Companies 166,700
------------
Total (Cost--$134,605,382)(a) $141,579,698
============
</TABLE>
- ------
Percentages indicated are based on net assets of $142,756,026.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........... $7,286,180
Unrealized depreciation........... (311,864)
----------
Net unrealized appreciation....... $6,974,316
==========
</TABLE>
(b) A portion of this security was loaned at November 30, 1995.
See notes to financial statements.
-46-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES (59.9%):
Federal Farm Credit Bank:
4,000,000 7.61%, 3/16/98........ $ 4,023,280
Federal Home Loan Bank:
2,000,000 7.89%, 12/5/97........ 2,003,220
Federal Home Loan Mortgage Corp.:
1,436,990 8.00%, 9/1/96,
Pool # M90063........ 1,476,048
550,767 7.50%, 1/15/97, CMO,
Series #1273-F....... 553,550
358,893 7.50%, 8/1/97,
Pool #M1-9078........ 368,537
598,557 6.50%, 2/1/98,
Pool #M9-0166........ 604,914
669,291 9.50%, 2/1/98,
Pool #N9-9054........ 693,131
768,066 6.00%, 5/1/98,
Pool #M1-7833........ 769,264
27,737 9.50%, 9/1/04,
Pool #38-0053........ 29,020
1,500,000 6.97%, 6/16/05........ 1,552,695
1,500,000 7.23%, 6/23/05........ 1,528,860
500,000 7.46%, 8/3/05......... 516,950
419,117 8.50%, 3/1/06,
Pool #E0-0022........ 436,795
689,447 7.50%, 4/1/08,
Pool #E4-5929........ 706,248
Federal National Mortgage Assoc.:
77,407 9.00%, 1/25/96, CMO,
Series #1991-2L...... 77,261
161,337 8.50%, 4/25/96, CMO,
Series #1991-119J.... 161,350
2,000,000 7.98%, 12/23/96....... 2,000,000
826,574 6.00%, 11/1/00,
Pool #190070......... 821,664
1,500,000 7.06%, 7/14/05........ 1,522,815
1,894,183 8.00%, 7/1/24,
Pool #190264......... 1,952,770
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Government National Mortgage Assoc.:
510,000 8.00%, 1/15/07
Pool # 315126........ $ 529,920
484,832 9.00%, 7/15/09
Pool # 390782........ 513,010
1,103,672 9.00%, 11/15/09
Pool # 359559........ 1,167,817
997,189 8.00%, 10/15/10
Pool # 414750........ 1,036,139
237,684 8.50%, 5/15/17,
Pool #0219152........ 248,304
200,332 8.50%, 6/15/21,
Pool #0307921........ 209,282
1,286,559 7.50%, 12/15/22,
Pool #0347332........ 1,314,298
766,387 8.00%, 5/15/23,
Pool #0352469........ 793,448
449,776 9.50%, 1/15/25
Pool # 384421........ 481,822
943,666 9.50%, 2/15/25,
Pool # 365292........ 1,010,902
36,817 9.50%, 2/15/25
Pool # 392967........ 39,440
913,348 9.50%, 2/15/25,
Pool # 401796........ 978,424
885,579 9.50%, 3/15/25,
Pool # 407257........ 948,677
455,842 9.50%, 4/15/25,
Pool # 386741........ 488,321
Tennessee Valley Authority Power:
1,000,000 8.25%, 11/15/96....... 1,025,000
-----------
Total U.S. Government Agencies 32,583,176
-----------
U.S. TREASURY BILLS (4.8%):
2,600,000 12/21/95(b)........... 2,591,538
-----------
Total U.S. Treasury Bills 2,591,538
-----------
U.S. TREASURY BONDS (2.8%):
1,000,000 12.75%,
11/15/10(b).......... 1,510,150
-----------
Total U.S. Treasury Bonds 1,510,150
-----------
</TABLE>
Continued
-47-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------ -----------
<S> <C> <C>
U.S. TREASURY NOTES (31.5%):
1,950,000 7.63%, 4/30/96.......... $ 1,967,023
1,000,000 5.75%, 9/30/97(b)....... 1,006,610
450,000 5.63%, 10/31/97(b)...... 452,115
1,500,000 7.13%, 10/15/98......... 1,567,845
1,900,000 7.00%, 4/15/99.......... 1,988,236
1,400,000 7.75%, 11/30/99(b)...... 1,510,600
2,000,000 6.88%, 3/31/00(b)....... 2,103,740
600,000 8.00%, 5/15/01(b)....... 667,758
2,000,000 7.50%, 5/15/02(b)....... 2,202,280
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------------------- -----------
<S> <C> <C>
U.S. TREASURY NOTES, CONTINUED:
725,000 5.75%, 8/15/03(b)...... $ 726,262
1,800,000 7.25%, 5/15/04(b)...... 1,977,444
500,000 7.25%, 8/15/04(b)...... 549,665
400,000 6.50%, 8/15/05(b)...... 421,120
-----------
Total U.S. Treasury Notes 17,140,698
-----------
INVESTMENT COMPANIES (0.5%):
259,300 Federated U.S. Treasury
Obligation Fund....... 259,300
-----------
Total Investment Companies 259,300
-----------
Total (Cost-$53,236,508)(a) $54,084,862
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $54,400,253.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........... $ 980,841
Unrealized depreciation........... (132,487)
---------
Net unrealized appreciation....... $ 848,354
=========
</TABLE>
(b) A portion of this security was loaned at November 30, 1995.
See notes to financial statements.
-48-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------------------------- -----------
<S> <C> <C>
MUNICIPAL BONDS (96.4%):
Missouri (90.8%):
300,000 Christian County School District R-6, 7.05%, 3/1/11................... $ 336,750
1,255,000 Columbia, 5.50%, 10/1/03.............................................. 1,353,831
1,000,000 Columbia Water & Electrical Revenue, 6.13%, 10/1/12................... 1,061,250
750,000 Franklin County Union Reorganized School District, Series 1993, 5.75%,
3/1/13............................................................... 768,750
1,000,000 Hazelwood School District, Series 1994, 5.85%, 3/1/09................. 1,047,500
1,000,000 Jefferson City School District, 6.70%, 3/1/11......................... 1,166,250
150,000 Kansas City Municipal Assistance Corp.,Leasehold Roe Bartle B-2,
7.15%, 4/15/04....................................................... 170,250
2,415,000 Kansas City School District Building,Capital Improvement Project,
5.15%, 2/1/08........................................................ 2,442,169
1,000,000 Kansas City School District Building, Elementary School Project--
Series D, 5.00%, 2/1/14, Insured by FGIC............................. 952,500
1,000,000 Kansas City School District, 5.38%, 7/1/05............................ 1,038,750
1,535,000 Kansas City Sewer Revenue, 7.25%, 4/1/03.............................. 1,682,744
700,000 Lincoln County Industrial Development Revenue, Monsanto Co. Project,
7.50%, 05/01/05, Prerefunded 4/1/99 @ 100............................ 770,000
1,500,000 Mehlville School District 09, 6.00%, 2/15/13.......................... 1,578,750
1,000,000 Missouri Higher Education Loan Authority, Series A, 5.75%, 2/15/02.... 1,045,000
750,000 Missouri Southern State College, 5.25%, 12/1/12....................... 735,938
1,000,000 Missouri State, 3rd Street Building, Series A, 5.25%, 8/1/08.......... 1,021,250
1,000,000 Missouri State, 3rd Street Building, Series A, 5.13%, 8/1/09.......... 1,007,500
1,500,000 Missouri State, Board Public Buildings, 6.40%, 12/1/09................ 1,605,000
100,000 Missouri State, Environmental Authority, Union Electric Co. Project,
7.40%, 5/1/20........................................................ 109,125
1,250,000 Missouri State, Environmental Improvement & Energy Resolution
Authority,Water Pollution Control, Series E, 5.63%, 7/1/16........... 1,264,063
1,000,000 Missouri State, Environmental Resources Authority, Revolving Fund,
Multiple Series A, 6.45%, 7/1/08..................................... 1,102,500
200,000 Missouri State, Environmental Resources Authority, Union Electric Co.,
Project, Series A, 7.40%, 5/1/20..................................... 222,750
1,100,000 Missouri State, Environmental Resources Authority, Water Pollution
Control Multipart, 6.88%, 6/1/14..................................... 1,218,250
500,000 Missouri State, Environmental Resources Authority, Water Pollution
Control, Multiple Series A, 6.55%, 7/1/14............................ 544,375
720,000 Missouri State, Environmental Resources Authority, Water Pollution
Control Springfield Project, 7.00%, 10/1/10.......................... 805,500
2,000,000 Missouri State, Health & Educational Facilities Authority, Health
Facilities Revenue,6.25%, 6/1/16..................................... 2,115,000
2,500,000 Missouri State, Health & Educational Facilities Authority, Health
Facilities Revenue,
Barnes--Jewish, Inc. Christian--A, 5.25%, 5/15/21.................... 2,359,375
2,000,000 Missouri State, Health & Educational Facilities Authority, Health
Facilities Revenue,
St. Lukes Health System, 5.10%, 11/15/13............................. 1,932,500
500,000 Missouri State, Health & Educational Facilities Authority, Barnes
Hospital, 7.13%, 12/15/12............................................ 572,500
600,000 Missouri State, Health & Educational Facilities Authority, Bethesda
Eye Institute, 6.63%, 11/1/09........................................ 681,000
1,200,000 Missouri State, Health & Educational Facilities Authority, Child
Mercy, 5.63%, 5/15/12................................................ 1,219,500
1,000,000 Missouri State, Health & Educational Facilities Authority, Freeman
Hospital Project, Series A, 5.38%, 2/15/14........................... 983,750
750,000 Missouri State, Health & Educational Facilities Authority, Sisters of
Mercy Health, 6.25%, 6/1/15.......................................... 793,125
800,000 Missouri State, Health & Educational Facilities Authority, St. Louis
University, Series A, 7.75%, 6/1/07.................................. 857,000
1,000,000 Missouri State, Housing Development, FHA Insured, 6.60%, 7/1/2........ 1,045,000
</TABLE>
Continued
-49-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------------------------------------------- -----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
500,000 Missouri State, Housing Development, FHA Insured, Series B, 7.00%,
9/1/10............................................................... $ 538,750
510,000 Missouri State, Housing Development, GNMA Mortgage Backed, Single
Family, Series C, 6.90%, 7/1/18...................................... 536,775
1,000,000 Missouri State, Water Pollution Control, 5.75%, 8/1/12................ 1,036,250
200,000 Missouri State, Water Pollution Control Service, Lees Summit, 7.13%,
12/1/10.............................................................. 225,500
1,000,000 Missouri Western State College, 5.40%, 10/1/16........................ 990,000
570,000 Ofallon, 5.75%, 3/1/10................................................ 584,962
600,000 Phelps County, Hospital Revenue, Medical Center, 8.20%, 3/1/05,
Prerefunded 3/1/00 @ 102............................................. 701,250
500,000 St. Charles County, Community College, 5.70%, 2/15/05................. 529,375
1,000,000 St. Charles County, Community College, 6.00%, 2/15/09................. 1,042,500
500,000 St. Charles County, Public Facilities, Leasehold Revenue Bond, 5.35%,
9/15/98.............................................................. 519,375
500,000 St. Charles County, Public Facilities, 6.38%, 3/15/07................. 544,375
800,000 St. Louis County, Industrial Development, Lutheran Health Care
Association, 7.38%, 2/1/14........................................... 816,000
750,000 St. Louis County, Pattonville R-3 School District, 6.25%, 2/1/10...... 824,062
785,000 St. Louis County, Rockwood School District No. R-6, 7.30%, 2/1/97..... 815,419
1,000,000 St. Louis County, Rockwood School District No. R-6, 5.00%, 2/1/04..... 1,020,000
2,500,000 St. Louis County, Series B, 5.50%, 2/1/13............................. 2,521,875
400,000 St. Louis, Industrial Development Authority, Anheuser-Busch Co.
Project, 6.65%, 5/1/16............................................... 480,500
500,000 St. Louis, Water Revenue, 6.00%, 7/1/14............................... 528,750
1,740,000 St. Peters, 5.80%, 1/1/09............................................. 1,813,950
1,065,000 St. Peters, 5.85%, 1/1/13............................................. 1,092,956
1,000,000 Sikeston, Electric Revenue, 6.25%, 6/1/22............................. 1,057,500
500,000 Southeast, Correctional Facilities, 5.75%, 10/15/08................... 520,000
500,000 Southeast, Correctional Facilities, 5.75%, 10/15/16................... 512,500
2,000,000 Springfield, R-12 School, 5.25%, 3/1/11............................... 1,982,500
400,000 Springfield, School District R12, Series A, 6.75%, 3/1/11............. 445,500
2,000,000 Springfield, Water Works Revenue, 5.60%, 5/1/23....................... 2,025,000
1,400,000 University of Missouri, Industry Development, 5.95%, 12/20/95......... 1,400,000
925,000 University of Missouri, Revenue Bonds, 6.50%, 11/1/11................. 996,687
2,000,000 University of Missouri, University Revenue, Refund & Improvement--
System Facilities, 5.50%, 11/1/23.................................... 2,025,000
400,000 Webster Groves, 6.60%, 2/1/10......................................... 462,500
-----------
66,199,306
-----------
</TABLE>
Continued
-50-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- --------------------------------------------------------------------- -----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
PUERTO RICO (5.6%):
1,000,000 Puerto Rico Commonwealth, Series A, 6.00%, 7/1/06.................... $ 1,070,000
500,000 Puerto Rico Commonwealth, 6.45%, 7/1/17.............................. 533,750
560,000 Puerto Rico Public Buildings Authority, Educational & Health
Facilities, Series K, 6.00%, 7/1/99................................. 592,200
2,000,000 Puerto Rico Public Buildings Authority, Guaranteed Public Education &
Health Facilities,
5.50%, 7/1/21....................................................... 1,930,000
-----------
4,125,950
-----------
Total Municipal Bonds 70,325,256
-----------
INVESTMENT COMPANIES (2.5%):
1,667,000 Federated Tax-Free Trust Mutual Fund................................. 1,667,000
157,000 Nuveen Tax-Exempt Money Market Fund.................................. 157,000
-----------
Total Investment Companies 1,824,000
-----------
Total (Cost-$69,365,693)(a) $72,149,256
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $72,931,512.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........... $2,957,506
Unrealized depreciation........... (173,943)
----------
Net unrealized appreciation....... $2,783,563
==========
</TABLE>
GNMA--Government National Mortgage Association
FGIC--Financial Guaranty Insurance Corp.
FHA--Federal Housing Administration
See notes to financial statements.
-51-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- -------------- ------------------------ ----------
<S> <C> <C>
MUNICIPAL BONDS (98.4%):
Alaska (1.3%):
300,000 Anchorage, 5.40%,
8/1/98................. $ 310,125
----------
Colorado (1.7%):
390,000 Aurora, 5.40%, 6/1/98... 403,650
----------
Illinois (8.9%):
500,000 Chicago, Water Revenue,
4.70%, 12/1/99......... 508,750
400,000 Illinois State General
Obligation Bonds,
5.25%, 4/1/01.......... 414,000
400,000 Illinois State General
Obligations Refunding
Bonds, 5.60%, 10/1/99.. 418,500
750,000 Illinois State Toll
Highway Authority
Priority, Revenue
Series A, 4.75%,
1/1/02................. 763,125
----------
2,104,375
----------
Indiana (2.1%):
500,000 Muncie, School Board,
4.95%, 1/15/02......... 508,750
----------
Iowa (1.9%):
425,000 Ottumwa County, 5.10%,
6/1/01................. 443,062
----------
Kentucky (1.7%):
380,000 Kenton County, Water
Revenue, 5.60%, 2/1/99. 397,100
----------
Maine (3.5%):
800,000 Maine Municipal Bond,
4.90%, 11/1/02......... 822,000
----------
Maryland (3.8%):
400,000 State Department of
Transportation, 4.10%,
12/15/00............... 395,000
500,000 Washington Suburban
Sanitation District,
Sewer Revenue, 5.00%,
6/1/00................. 518,125
----------
913,125
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------ ----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Michigan (7.1%):
400,000 Chelsea, 5.25%, 5/1/01.. $ 417,500
800,000 Kent City, Building
Authority, 4.50%,
12/1/01................ 804,000
450,000 Oakland County, Building
Authority, 4.75%,
4/1/00................. 462,375
----------
1,683,875
----------
Minnesota (3.7%):
365,000 Duluth, 4.65%, 2/1/02... 370,019
500,000 Minnesota State, 5.50%,
8/1/98................. 518,750
----------
888,769
----------
Nevada (6.0%):
900,000 Sparks, 4.80%, 3/1/04... 907,875
500,000 Washoe County, 5.30%,
8/1/00................. 523,125
----------
1,431,000
----------
New Mexico (4.4%):
345,000 Albuquerque, 4.40%,
7/1/00................. 345,862
700,000 New Mexico State Capital
Projects, 4.60%,
8/1/00................. 709,625
----------
1,055,487
----------
New York (2.2%):
500,000 New York Power
Authority, 5.85%,
1/1/00................. 532,500
----------
Pennsylvania (3.9%):
500,000 Bucks County, 5.60%,
3/1/98................. 516,250
400,000 Delaware County, 4.35%,
10/1/00................ 403,500
----------
919,750
----------
</TABLE>
Continued
-52-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------ ----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Rhode Island (3.8%):
900,000 Rhode Island State
Construction Capital
Development, 4.60%,
11/1/03................ $ 896,625
----------
South Carolina (3.6%):
450,000 Charleston School
District, 4.40%,
2/1/98................. 453,375
400,000 Charleston, 4.50%,
2/1/00................. 404,000
----------
857,375
----------
South Dakota (2.7%):
640,000 South Dakota Building
Authority, Finance
Bonds, 5.00%, 9/1/02... 652,800
----------
Texas (10.9%):
400,000 Angelina & Neches River
Authority, 3.85%*,
5/1/14................. 400,000
450,000 Dallas, Water & Sewer
Revenue, 4.60%, 4/1/01. 456,188
800,000 Houston, Series C,
5.50%, 4/1/01.......... 842,000
400,000 San Antonio, 4.88%,
8/1/99................. 409,500
450,000 Tarrant, Water Control,
5.60%, 3/1/00.......... 473,625
----------
2,581,313
----------
Mississippi (2.2%):
500,000 Mississippi Capital
Improvement, 5.00%,
8/1/99................. 514,375
----------
Missouri (1.4%):
320,000 Jeff County, 4.70%,
3/1/01................. 326,400
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------ ----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Utah (4.1%):
560,000 North Davis County,
Sewer District, 5.70%,
3/1/02................. $ 597,100
350,000 North Davis County,
Sewer District, 5.70%,
3/1/03................. 374,063
----------
971,163
----------
Vermont (1.1%):
270,000 Vermont Municipal Bond,
4.50%, 12/1/01......... 272,700
----------
Virginia (4.3%):
200,000 Peninsula Port Authority
Revenue--Shell Co.,
3.75%*, 12/1/05........ 200,000
400,000 Virginia Beach, 4.20%,
7/15/98................ 402,500
400,000 Virginia Public Building
Refunding Bonds, 5.70%,
8/1/00................. 425,000
----------
1,027,500
----------
Washington (9.0%):
500,000 Clark County, 4.60%,
1/1/01................. 502,500
500,000 Grant County Public
Utilities District,
No. 2 Electric Revenue
Series F, 4.80%*,
1/1/04................. 501,875
600,000 Seattle, 4.80%, 5/1/02.. 609,750
250,000 Seattle, Water System,
Refunding Bonds, 4.70%,
12/1/00................ 255,937
250,000 Washington State
Refunding Bonds, Series
R-92C, 5.75%, 9/1/02... 267,813
----------
2,137,875
----------
</TABLE>
Continued
-53-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------ -----------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Wisconsin (3.1%):
325,000 Brown County, 5.00%,
8/1/99 4.80%, 11/1/01.. $ 331,500
380,000 Milwaukee County,
Refunding Bonds, Series
A, 5.25%, 9/1/00....... 395,200
-----------
726,700
-----------
Total Municipal Bonds 23,378,394
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ------------------------ -----------
<S> <C> <C>
INVESTMENT COMPANIES (0.6%):
1,000 Federated Tax-Free Trust
Mutual Fund............ $ 1,000
138,000 Nuveen Tax-Exempt Money
Market Fund............ 138,000
-----------
Total Investment Companies 139,000
-----------
Total (Cost--$23,293,255)(a) $23,517,394
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $23,753,686.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............. $224,139
Unrealized depreciation............. 0
--------
Net unrealized appreciation......... $224,139
========
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity agreements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at November 30, 1995.
See notes to financial statements.
-54-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS (95.4%):
BRITAIN (9.6%):
Banking (3.0%):
47,600 Abbey National...... $ 467,403
78,900 Standard Chartered
Bank............... 731,307
-----------
1,198,710
-----------
Business & Public Services (0.8%):
22,200 Carlton
Communications,
PLC................ 331,400
-----------
Oil & Gas Exploration (1.1%):
55,200 British Petroleum... 434,384
-----------
Publishing (2.5%):
31,000 Reed Elsevier
International...... 495,008
53,000 Reuters Holdings.... 500,162
-----------
995,170
-----------
Telecommunications (1.2%):
134,000 Vodafone............ 479,590
-----------
Utilities (1.0%):
49,800 Powergen............ 407,505
-----------
Total Britain 3,846,759
-----------
DENMARK (1.1%):
Business & Public Services (1.1%):
6,000 Copenhagen Airport.. 455,762
-----------
Total Denmark 455,762
-----------
FINLAND (1.2%):
Multi-Industry (1.2%):
8,400 Nokia Preferred
Free............... 461,609
-----------
Total Finland 461,609
-----------
FRANCE (5.8%):
Business & Public Services (1.1%):
7,000 Ecco TT............. 445,483
-----------
Consumer Goods (1.1%):
820 Carrefour........... 453,512
-----------
Insurance (1.4%):
9,000 AXA................. 539,689
-----------
Machine Tools (1.1%):
1,400 Sidel, SA........... 441,407
-----------
Manufacturing--Consumer Goods (1.1%):
4,800 BIC................. 450,548
-----------
Total France 2,330,639
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS, CONTINUED:
GERMANY (4.4%):
Healthcare (1.1%):
940 Gehe, AG............ $ 427,319
-----------
Machinery & Engineering (1.1%):
1,360 Mannesmann.......... 436,820
-----------
Miscellaneous (1.0%):
2,550 SAP Preference...... 402,638
-----------
Utilities--Electric (1.2%):
11,300 Veba................ 461,306
-----------
Total Germany 1,728,083
-----------
HOLLAND (9.0%):
Business & Public Services (1.5%):
14,000 Randstadt Holdings.. 587,665
-----------
Beverages (1.2%):
2,937 Heineken Holdings,
Series A........... 477,521
-----------
Construction & Housing (1.2%):
16,000 IHC Caland.......... 482,694
-----------
Entertainment (1.0%):
6,600 Polygram............ 397,815
-----------
Insurance (3.0%):
16,000 Aegon N.V........... 652,824
8,000 International
Nederlanden........ 524,238
-----------
1,177,062
-----------
Merchandising (1.1%):
13,500 Ahrend Groep N.V.... 454,844
-----------
Total Holland 3,577,601
-----------
HONG KONG (3.5%):
Banking (0.7%):
55,000 Guoco Group......... 260,952
-----------
Diversified--Conglomerates (0.6%):
229,000 First Pacific Co.
Limited............ 248,683
-----------
Financial Services (0.7%):
228,000 Peregrine Investment
Holdings........... 296,232
-----------
</TABLE>
Continued
-55-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS, CONTINUED:
HONG KONG (3.5%): CONTINUED
Multi-Industry (1.5%):
57,000 Hutchinson
Whampoa............ $ 322,024
36,000 Swire Pacific A..... 272,264
-----------
594,288
-----------
Total Hong Kong 1,400,155
-----------
ITALY (2.1%):
Merchandising (1.0%):
47,500 Bulgari(b).......... 381,611
-----------
Telecommunications (1.1%):
278,000 Telecom Italia
Mobile(b).......... 448,423
-----------
Total Italy 830,034
-----------
JAPAN (33.8%):
Appliances & Household Goods (1.0%):
10,000 Amway Japan......... 408,746
-----------
Automobiles (1.2%):
26,000 Honda Motor......... 471,191
-----------
Banks (2.8%):
24,000 Asahi Bank.......... 278,932
12,000 Mitsubishi Bank..... 262,385
15,000 Sanwa Bank.......... 291,047
14,000 Sumitomo Bank....... 270,265
-----------
1,102,629
-----------
Building Materials (0.8%):
30,000 Matsushita Electric
Works.............. 310,253
-----------
Business & Public Services (0.8%):
5,000 Secom & Co.......... 338,324
-----------
Construction & Housing (0.6%):
20,000 Sekisui House....... 234,413
-----------
Chemicals (0.8%):
16,000 Shin-Etsu Chemical.. 330,937
-----------
Electrical Components & Instruments (2.2%):
5,000 Kyocera Corp........ 396,434
11,000 Tokyo Electron...... 470,206
-----------
866,640
-----------
Electrical Equipment (6.6%):
37,000 Hitachi, Ltd........ 375,357
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS, CONTINUED:
JAPAN, CONTINUED:
Electrical Equipment (6.6%): continued
21,000 Kinden.............. $ 345,415
11,000 Murata Manufacturing
Co................. 395,449
27,000 NEC................. 345,711
38,000 Oki Electric(b)..... 347,700
15,000 Omron............... 335,369
8,000 Rohm Co............. 489,313
-----------
2,634,314
-----------
Engineering--Industrial Construction
(0.9%):
31,000 Nishimatsu
Construction....... 372,500
-----------
Financial Services (1.7%):
14,000 Daiwa Securities.... 194,425
15,000 Mitsubishi Trust &
Banking............ 230,474
4,000 Nichiei Co.......... 256,476
-----------
681,375
-----------
Industrial Components (0.7%):
18,000 Bridgestone......... 265,931
-----------
Leisure--Recreation & Gaming (0.8%):
6,300 Sankyo.............. 300,945
-----------
Machinery--Industrial, Farm (0.9%):
47,000 Mitsubishi Heavy
Industry........... 375,426
-----------
Media (0.9%):
1,300 Nippon Television
Network............ 341,869
-----------
Metals--Nonferrous (0.8%):
11,000 Tostem.............. 335,861
-----------
Miscellaneous (3.0%):
3,000 Keyence Corp........ 369,349
6,000 Nintendo............ 475,130
34,000 Ricoh............... 348,271
-----------
1,192,750
Pharmaceuticals (0.4%):
8,000 Yamanouchi
Pharmaceuticals.... 172,560
-----------
Recreation (1.3%):
30,000 Canon, Inc.......... 528,908
-----------
</TABLE>
Continued
-56-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS, CONTINUED:
JAPAN: CONTINUED
Retail (1.7%):
4,000 Seven-Eleven Japan.. $ 277,356
16,000 Kato Denki.......... 409,731
-----------
687,087
-----------
Steel (1.6%):
120,000 NKK Corp............ 330,937
84,000 Nippon Steel........ 289,569
-----------
620,506
-----------
Telecommunications (1.3%):
23 DDI Corp.(b)........ 185,305
41 Nippon Telephone &
Telegraph.......... 335,576
-----------
520,881
-----------
Transportation--Shipping (1.0%):
75,000 Hitachi Zosen Corp.. 385,600
-----------
Total Japan 13,479,646
-----------
MALAYSIA (1.1%):
Construction & Housing (0.7%):
200,000 Renong.............. 291,799
-----------
Financial Services (0.4%):
39,000 Hong Leong Credit... 155,324
-----------
Total Malaysia 447,123
-----------
NORWAY (0.8%):
Energy (0.8%):
26,000 Saga Petroleum AS,
A shares........... 332,784
-----------
Total Norway 332,784
-----------
SINGAPORE (1.5%):
Financial Services (0.9%):
29,000 OCBC Foreign........ 347,459
-----------
Transportation--Marine (0.6%):
31,000 Keppel Corp.,
Limited............ 254,940
-----------
Total Singapore 602,399
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS, CONTINUED:
SPAIN (2.1%):
Real Estate (1.3%):
9,000 Mapfre Vida......... $ 508,433
-----------
Retail (0.8%):
16,700 Pryca............... 325,788
-----------
Total Spain 834,221
-----------
SWEDEN (5.7%):
Automobiles (1.8%):
8,700 Autoliv AB.......... 514,256
10,000 Volvo............... 207,190
-----------
721,446
-----------
Electrical & Electronics (1.2%):
21,000 Ericsson B Free..... 494,284
-----------
Insurance--Multi-line (1.5%):
22,000 Skandia Forsakring.. 583,177
-----------
Recreation (1.2%):
13,000 Astra A Free........ 484,229
-----------
Total Sweden 2,283,136
-----------
SWITZERLAND (5.9%):
Electronics--Defense Related (1.3%):
460 Brown Boveri--Series
A Bearer........... 529,088
-----------
Food Processing & Packaging (0.5%):
190 Nestle SA
Registered......... 202,996
-----------
Healthcare (3.1%):
75 Roche Genussshein... 567,428
740 Sandoz SA
Registered......... 632,998
-----------
1,200,426
-----------
Insurance--Multi-line (1.0%):
370 Swiss Reinsurance
Registered......... 409,809
-----------
Total Switzerland 2,342,319
-----------
UNITED STATES (7.8%):
Construction & Housing (1.1%):
10,300 Industrie Natuzzi--
ADR................ 446,762
-----------
Finance (1.2%):
8,000 Brazilian Investment
Co.(b)............. 231,280
</TABLE>
Continued
-57-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS, CONTINUED:
UNITED STATES, CONTINUED
270,000 China North
Industries
Investment Co.(b).. $ 237,600
---------
468,880
---------
Healthcare (0.8%):
7,000 Elan--ADR(b)........ 328,125
---------
Investment Funds--Closed End (3.8%):
15,000 Chile Fund.......... 341,250
6,900 India Magnum Fund... 338,100
60 Korea Eurofund...... 255,000
1,429 Korea International
Investment Fund.... 178,139
3,800 Korea International
Investment Fund
IV(b).............. 397,100
---------
1,509,589
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR MARKET VALUE
PRINCIPAL SECURITY IN U.S.
AMOUNT DESCRIPTION DOLLARS
- --------- -------------------- ------------
<S> <C> <C>
COMMON & PREFERRED STOCKS, CONTINUED:
UNITED STATES, CONTINUED
Multi-Industry (0.6%):
13,000 Argentinian
Investment Co.(b).. $ 226,200
-----------
Telecommunications (0.3%):
8,800 Videotron Holdings
PLC--ADR(b)........ 130,900
-----------
Total United States 3,110,456
-----------
Total Common & Preferred
Stocks 38,062,726
-----------
U.S. GOVERNMENT AGENCIES (6.9%):
Federal Home Loan Mortgage Corp.:
2,742,000 12/01/95............ 2,741,558
-----------
Total U.S. Government
Agencies 2,741,558
-----------
Total (Cost--$37,353,300)(a) $40,804,284
===========
</TABLE>
FORWARD CURRENCY CONTRACTS
<TABLE>
<CAPTION>
DELIVERY CONTRACT CONTRACT VALUE MARKET VALUE APPRECIATION
DATE PRICE (U.S. DOLLARS) (U.S. DOLLARS) (DEPRECIATION)
CURRENCY -------- --------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Currency Sold:
Swiss Franc............ 12/4/95 $1.158000 $199,729 $197,055 $ 2,674
-------- -------- -------
Total Currency Sold.. $199,729 $197,055 $ 2,674
======== ======== =======
Currency Purchased:
Dutch Guilder.......... 12/1/95 1.606900 $158,205 $157,160 $(1,045)
Swiss Franc............ 12/1/95 1.163100 34,479 34,167 (312)
-------- -------- -------
Total Currency Pur-
chased.............. $192,684 $191,327 $(1,357)
======== ======== =======
Net receivable for for-
ward currency contracts
purchased and sold..... $ 1,317
=======
</TABLE>
- ------
Percentages indicated are based on net assets of $39,924,497.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........... $3,634,646
Unrealized depreciation........... (183,662)
----------
Net unrealized appreciation....... $3,450,984
==========
</TABLE>
(b) Represents non-income producing security.
See notes to financial statements
-58-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
1.ORGANIZATION
The ARCH Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. As of November 30, 1995, the Fund is authorized to
offer the following investment portfolios: Money Market, Treasury Money
Market, Tax-Exempt Money Market, Growth & Income Equity, Emerging Growth,
Balanced, Government & Corporate Bond, U.S. Government Securities, Missouri
Tax-Exempt Bond, Short-Intermediate Municipal, International Equity and
Kansas Tax-Exempt Bond Portfolios (referred to individually as a
"Portfolio" and collectively, the "Portfolios"). The Fund was organized as
a Maryland corporation on September 9, 1982. The Short-Intermediate
Municipal Portfolio commenced operations July 10, 1995. The Kansas Tax-
Exempt Bond Portfolio has not yet commenced operations.
As approved by its shareholders at a special shareholders meeting held
September 26, 1995, effective October 2, 1995, the ARCH Tax-Exempt Trust
(the "Trust") was reorganized into the Fund as transacted by (a) the tax-
free transfer of all of the assets and liabilities of the Trust's Tax-
Exempt Money Market and Missouri Tax-Exempt Bond Portfolios to similarly-
named Portfolios of the Fund in exchange for shares of the respective Fund
Portfolios; (b) the distribution of the Fund Portfolios' shares to
shareholders of the Trust Portfolios; and (c) the termination of the Trust
under state law and its deregistration under the 1940 Act. Also, the fiscal
period end changed from May 31 to November 30 for the Tax-Exempt Money
Market and Missouri Tax-Exempt Bond Portfolios. Therefore, the current
period statements of operations and changes in net assets and the financial
highlights for those Portfolios present the six-month period ended November
30, 1995.
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles.
SECURITIES VALUATION:
The securities of the Money Market, Treasury Money Market and Tax-Exempt
Money Market Portfolios (collectively, "the money market portfolios") are
valued at amortized cost. Amortized cost valuation involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the
effect of fluctuating interest rates on the market value of the instrument.
In addition, the money market portfolios may not (a) purchase any
instrument with a remaining maturity greater than 397 days unless such
instrument is subject to a demand feature, or (b) maintain a dollar-
weighted-average portfolio maturity which exceeds 90 days. The securities
of the Growth & Income Equity, Emerging Growth, Balanced, Government &
Corporate Bond, U.S. Government Securities, Missouri Tax-Exempt Bond,
Short-Intermediate Municipal and International Equity Portfolios
(collectively, "the variable net asset value portfolios") that are traded
on a recognized exchange are valued at the last sale price on the national
securities market. Securities traded only on over-the-counter markets are
valued on the basis of market value when available. Securities for which
there were no transactions are valued at the mean of the most recent bid
and asked prices. Securities maturing in 60 days or less are valued at
amortized cost. Securities, including restricted securities, for which
market quotations are not readily available, are valued at fair market
value by the investment adviser (or the sub-investment adviser) in
accordance with guidelines
Continued
-59-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
approved by the Fund's Board of Directors. Quotations of foreign securities
in foreign currency are converted to the U.S. dollar equivalent at the
prevailing exchange rate on the date of conversion. Investments in
investment companies are valued at their respective net asset values as
reported by such companies. The differences between cost and market values
of the investments of the variable net asset portfolios are reflected as
unrealized appreciation or depreciation.
REPURCHASE AGREEMENTS:
The Portfolios may engage in repurchase agreement transactions. Under the
terms of a typical repurchase agreement, a Portfolio takes possession of an
underlying debt obligation subject to an obligation of the seller to
repurchase, and the Portfolio to resell, the obligation at an agreed upon
price and time, thereby determining the yield during the Portfolio's
holding period. This arrangement results in a fixed rate of return that is
not subject to market fluctuations during the Portfolio's holding period.
The value of the collateral exceeds at all times the total amount of the
repurchase obligations, including interest. In the event of counterparty
default, the Portfolio has the right to use the collateral to offset losses
incurred. There is potential for loss to the Portfolio in the event the
Portfolio is delayed or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the
value of the underlying securities during the period while the Portfolio
seeks to assert its rights. The Portfolios' investment adviser, acting
under the supervision of the Board of Directors, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which
the Portfolios enter into repurchase agreements to evaluate potential
risks.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on the trade date. Realized gains and
losses on investments sold are recorded on the identified cost basis.
Interest income is accrued on a daily basis. Dividend income is recorded on
the ex-dividend date. Realized and unrealized gains and losses are
allocated to each share class based upon relative net assets of each class
of shares.
FOREIGN CURRENCY TRANSLATION:
The market value of investment securities, other assets and liabilities of
the International Equity Portfolio denominated in a foreign currency are
translated into U.S. dollars at the current exchange rate. Purchases and
sales of securities, income receipts and expense payments are translated
into U.S. dollars at the exchange rate on the dates of the transactions.
The International Equity Portfolio isolates that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from the fluctuation arising from changes in market prices of securities
held.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of foreign securities, sales of foreign currencies, currency
exchange fluctuations between the trade and settlement dates on securities
transactions, and the difference between the amount of assets and
liabilities recorded and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities, including investments
in securities, resulting from changes in exchange rates.
Continued
-60-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
RISKS ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES:
Investments in securities of foreign issuers carry certain risks not
ordinarily associated with investments in securities of domestic issuers.
Such risks include future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws
and restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets, confiscatory taxation,
political or social instability or diplomatic developments which could
adversely affect investments in those countries.
Certain countries may also impose substantial restrictions on investments
in their capital markets by foreign entities, including restrictions on
investments in issuers of industries deemed sensitive to relevant national
interests. These factors may limit the investment opportunities available
in the International Equity Portfolio and result in a lack of liquidity and
a high price volatility with respect to securities of issuers from
developing countries.
FORWARD CURRENCY EXCHANGE CONTRACTS:
The International Equity Portfolio may enter into forward foreign currency
exchange contracts ("forward"). A forward is an agreement between two
parties to buy and sell a currency at a set price on a future date. The
market value of the forward fluctuates with changes in currency exchange
rates. The forward is marked-to- market daily and the change in market
value is recorded by the Fund as unrealized appreciation or depreciation.
When the forward is closed, the Fund records a realized gain or loss equal
to the fluctuation in value during the period the forward was opened. The
Fund could be exposed to risk if a counterparty is unable to meet the terms
of a forward or if the value of the currency changes unfavorably.
SECURITIES LENDING:
To increase return, the Growth & Income Equity, Emerging Growth, Balanced,
Government & Corporate Bond, U.S. Government Securities Portfolio and
Short-Intermediate Municipal Portfolios may, from time to time, lend
portfolio securities to broker-dealers, banks or institutional borrowers of
securities pursuant to agreements requiring that the loans be continuously
secured by collateral equal, at all times, in value to at least the market
value of the securities loaned. Collateral for such loans may include cash,
securities of the U.S. Government, or its agencies or instrumentalities,
irrevocable letters of credit or any combination thereof. The collateral
must be valued daily, and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the lending
Portfolio. By lending its securities, a Portfolio can increase its income
by continuing to receive interest or dividends on the loaned securities as
well as either investing the cash collateral in short-term instruments or
obtaining yield in the form of interest paid by the borrower when U.S.
Government securities are used as collateral. Loans are subject to
termination by the Portfolio or the borrower at any time. The risks, to the
Portfolios, of securities lending are that the borrower may not provide
additional collateral when required or return the securities when due. In
addition, if cash collateral invested by a Portfolio is less than the
amount required to be returned to the borrower as a result of a decrease in
the value of the cash collateral investments, the Portfolio must compensate
the borrower for the deficiency. At November 30, 1995, the following
Portfolios had securities with the following market values on loan:
Continued
-61-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
MARKET VALUE OF
PORTFOLIO LOANED SECURITIES
--------- -----------------
<S> <C>
Growth & Income Portfolio............................. $42,209,625
Emerging Growth Portfolio............................. 42,846,068
Balanced Portfolio.................................... 11,266,798
Government & Corporate Bond Portfolio................. 38,699,882
U.S. Government Securities Portfolio.................. 14,091,003
</TABLE>
The loaned securities were fully collateralized with cash and U.S.
Government securities.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends on each share of the Portfolios are determined in the same
manner, irrespective of class, except that shares of each class bear
separate fees under either a Distribution and Services Plan or an
Administrative Services Plan adopted for each class and enjoy certain
exclusive voting rights on matters relating to these Plans. It is the
policy of the Money Market, Treasury Money Market, Tax-Exempt Money Market,
Government & Corporate Bond, U.S. Government Securities, Missouri Tax-
Exempt Bond and Short-Intermediate Municipal Portfolios to declare
dividends daily from net investment income and to pay such dividends no
later than five business days after the end of the month. The Growth &
Income Equity, Emerging Growth, Balanced and International Equity
Portfolios declare and pay dividends from net investment income quarterly.
Net realized capital gains for each Portfolio, if any, are distributed at
least annually. Additional distributions of net investment income and
capital gains may be made at the discretion of the Board of Directors in
order to avoid the 4% excise tax to which a Portfolio is subject with
respect to certain undistributed amounts of net investment income and
capital gains.
During the year ended November 30, 1994, the Fund adopted Statement of
Position 93-2, Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions
by Investment Companies. Accordingly, permanent book and tax basis
differences relating to shareholder distributions have been reclassified to
additional paid-in capital. Net investment income, net realized gains and
net assets were not affected by this change.
Dividends from net investment income and from net realized capital gains
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for foreign currency transactions,
expiring capital loss carryforwards and deferrals of certain losses.
FEDERAL INCOME TAXES:
It is the policy of each of the Portfolios to qualify or to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of net
investment income and net realized capital gains sufficient to relieve it
from all, or substantially all, federal income taxes.
Continued
-62-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
ORGANIZATION COSTS:
The Portfolios bear all costs in connection with their organization,
including the fees and expenses of registering and qualifying shares for
distribution under Federal and state securities regulations. All such costs
are amortized using the straight-line method over a period of five years
from the date each Portfolio commenced operations: from December 2, 1991,
for the Treasury Money Market Portfolio; from May 1, 1992, for the Emerging
Growth Portfolio; from April 1, 1993, for the Balanced Portfolio; from
April 4, 1994, for the International Equity Portfolio; and from July 10,
1995, for the Short-Intermediate Municipal Portfolio. As of November 30,
1995, all costs were fully amortized for the Money Market, Tax-Exempt Money
Market, Growth & Income Equity, Government & Corporate Bond, U.S.
Government Securities and Missouri Tax-Exempt Bond Portfolios.
OTHER:
Operating expenses of the Fund not directly attributable to a Portfolio or
to any class of shares of a Portfolio are prorated among the Portfolios
based on the relative net assets of each Portfolio or other appropriate
basis. Operating expenses directly attributable to a Portfolio are charged
directly to that Portfolio's operations. Fees paid under either a
Distribution and Services Plan or an Administrative Services Plan are borne
by the specific class of shares to which they apply. Certain prior year
balances have been reclassified to be consistent with current year
presentation.
3.SHARES OF COMMON STOCK
The Fund is authorized to issue four classes of Portfolio shares in each
Portfolio (except as noted): Investor A Shares, Investor B Shares (except
the Treasury Money Market, Tax-Exempt Money Market and Short- Intermediate
Municipal Portfolios), Trust Shares, and Institutional Shares (except the
Tax-Exempt Money Market, Missouri Tax-Exempt Bond, Kansas Tax-Exempt Bond
and Short-Intermediate Municipal Portfolios). Investor A shares of the
variable net asset value portfolios are sold with front-end sales charges.
Investor B Shares of the variable net asset value portfolios may be subject
to contingent deferred sales charges ("CDSC") based on the lesser of the
net asset value of the shares on the redemption date or the original cost
of the shares redeemed. The following table sets forth the time schedule of
redemptions of Investor B Shares subject to CDSC:
<TABLE>
<CAPTION>
CDSC
(PERCENTAGE OF
NUMBER OF YEARS AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
---------------------- --------------
<S> <C>
One or less................................................... 5.0%
More than one, but less than two.............................. 4.0%
Two, but less than three...................................... 3.0%
Three, but less than four..................................... 3.0%
Four, but less than five...................................... 2.0%
Five, and up to and including six............................. 1.0%
More than six................................................. None
</TABLE>
Continued
-63-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
Investor B Shares of the Money Market Portfolio may not be purchased
directly but are available only through exchanges of Investor B Shares of
the variable net asset value portfolios. Each class of shares in a
Portfolio has identical rights and privileges except with respect to the
fees paid by the classes under either a Distribution and Services Plan or
an Administrative Services Plan, expenses allocable exclusively to
each class of shares, voting rights on matters affecting a single class of
shares, the exchange privilege of each class of shares, and the automatic
conversion of Investor B Shares of a Portfolio into Investor A Shares of
that Portfolio eight years after purchase.
As of November 30, 1995, the Fund's Articles of Incorporation authorize the
Board of Directors, in its discretion, to issue up to seven billion full
and fractional shares of capital stock, $0.001 par value per share, and to
classify or reclassify any unissued shares of the Fund into one or more
additional classes. Pursuant to such authority, as of November 30, 1995,
the Funds shares were classified as follows:
<TABLE>
<CAPTION>
CURRENTLY REPRESENT INTERESTS IN:
AUTHORIZED -----------------------------------------
CLASS SHARES (000) PORTFOLIO CLASS
------------------------ ------------ --------------------------- -------------
<S> <C> <C> <C>
Class AShares........... 550,000 Money Market Investor A
Class A--Special Series
1 Shares............... 1,800,000 Money Market Trust
Class A--Special Series
2 Shares............... 300,000 Money Market Institutional
Class A--Special Series
3 Shares............... 50,000 Money Market Investor B
Class BShares........... 100,000 Treasury Money Market Investor A
Class B--Special Series
1 Shares............... 1,000,000 Treasury Money Market Trust
Class B--Special Series
2 Shares............... 300,000 Treasury Money Market Institutional
Class CShares........... 5,000 Growth & Income Equity Investor A
Class C--Special Series
1 Shares............... 50,000 Growth & Income Equity Trust
Class C--Special Series
2 Shares............... 20,000 Growth & Income Equity Institutional
Class C--Special Series
3 Shares............... 50,000 Growth & Income Equity Investor B
Class DShares........... 5,000 Government & Corporate Bond Investor A
Class D--Special Series
1 Shares............... 50,000 Government & Corporate Bond Trust
Class D--Special Series
2 Shares............... 20,000 Government & Corporate Bond Institutional
Class D--Special Series
3 Shares............... 50,000 Government & Corporate Bond Investor B
Class EShares........... 5,000 U.S. Government Securities Investor A
Class E--Special Series
1 Shares............... 15,000 U.S. Government Securities Trust
Class E--Special Series
2 Shares............... 20,000 U.S. Government Securities Institutional
Class E--Special Series
3 Shares............... 50,000 U.S. Government Securities Investor B
Class FShares........... 5,000 Emerging Growth Investor A
Class F--Special Series
1 Shares............... 15,000 Emerging Growth Trust
Class F--Special Series
2 Shares............... 20,000 Emerging Growth Institutional
Class F--Special Series
3 Shares............... 50,000 Emerging Growth Investor B
</TABLE>
Continued
-64-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
CURRENTLY REPRESENT INTERESTS IN:
AUTHORIZED --------------------------------------------
CLASS SHARES (000) PORTFOLIO CLASS
------------------------ ------------ ------------------------------ -------------
<S> <C> <C> <C>
Class GShares........... 5,000 Balanced Investor A
Class G--Special Series
1 Shares............... 15,000 Balanced Trust
Class G--Special Series
2 Shares............... 20,000 Balanced Institutional
Class G--Special Series
3 Shares............... 50,000 Balanced Investor B
Class HShares........... 10,000 International Equity Investor A
Class H--Special Series
1 Shares............... 10,000 International Equity Trust
Class H--Special Series
2 Shares............... 10,000 International Equity Institutional
Class H--Special Series
3 Shares............... 50,000 International Equity Investor B
Class IShares........... 25,000 Short-Intermediate Municipal Investor A
Class I--Special Series
1 Shares............... 25,000 Short-Intermediate Municipal Trust
Class JShares........... 50,000 Tax-Exempt Money Market Investor A
Class J--Special Series
1 Shares............... 300,000 Tax-Exempt Money Market Trust
Class KShares........... 25,000 Missouri Tax-Exempt Bond Investor A
Class K--Special Series
1 Shares............... 25,000 Missouri Tax-Exempt Bond Trust
Class K--Special Series
2 Shares............... 10,000 Missouri Tax-Exempt Bond Investor B
Class LShares........... 25,000 Kansas Tax-Exempt Bond Investor A
Class L--Special Series
1 Shares............... 25,000 Kansas Tax-Exempt Bond Trust
Class L--Special Series
2 Shares............... 10,000 Kansas Tax-Exempt Bond Investor B
Unclassified............ 1,780,000
</TABLE>
Each Portfolio share represents an equal, proportionate interest in the
Portfolio with respect to other shares outstanding, irrespective of series.
Continued
-65-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
4.CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Fund were as follows:
<TABLE>
<CAPTION>
TREASURY MONEY TAX-EXEMPT MONEY
MONEY MARKET PORTFOLIO MARKET PORTFOLIO MARKET PORTFOLIO
-------------------------------- ---------------------------- ----------------------------
YEAR YEAR YEAR YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, MAY 31,
1995 1994 1995 1994 1995 1995
--------------- --------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued................ $ 112,310,285 $ 45,020,563 $ 6,460,977 $ 9,696,228 $ 2,077,331 $ 7,203,987
Dividends reinvested... 2,767,393 1,375,505 128,151 57,312 83,299 173,129
Shares redeemed........ (98,595,971) (44,934,730) (5,526,091) (9,451,382) (1,895,782) (10,869,665)
--------------- --------------- ------------- ------------- ------------- -------------
Change in net assets
from Investor A share
transactions.......... $ 16,481,707 $ 1,461,338 $ 1,063,037 $ 302,158 $ 264,848 $ (3,492,549)
=============== =============== ============= ============= ============= =============
TRUST SHARES:
Proceeds from shares
issued................ $ 1,743,384,071 $ 2,146,851,680 $ 833,331,145 $ 847,158,604 $ 105,944,026 $ 250,926,993
Dividends reinvested... 8,609,524 5,379,266 2,884,381 1,347,851 133,447 239,807
Shares redeemed........ (1,598,808,463) (2,229,026,547) (825,544,533) (862,910,449) (113,373,935) (278,436,992)
--------------- --------------- ------------- ------------- ------------- -------------
Change in net assets
from Trust share
transactions.......... $ 153,185,132 $ (76,795,601) $ 10,670,993 $ (14,403,994) $ (7,296,462) $ (27,270,192)
=============== =============== ============= ============= ============= =============
INSTITUTIONAL SHARES:
Proceeds from shares
issued................ $ 46,450,288 $ 30,670,816 $ 39,942 $ 10
Dividends reinvested... 125 586
Shares redeemed........ (43,405,997) (20,375,738) (12,200)
--------------- --------------- ------------- -------------
Change in net assets
from Institutional
share transactions.... $ 3,044,291 $ 10,295,203 $ 28,328 $ 10
=============== =============== ============= =============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................. 112,310,285 45,020,563 6,460,977 9,696,228 2,077,331 7,203,987
Reinvested............. 2,767,393 1,375,505 128,151 57,312 83,299 173,129
Redeemed............... (98,595,971) (44,934,730) (5,526,091) (9,451,382) (1,895,782) (10,869,665)
--------------- --------------- ------------- ------------- ------------- -------------
Change in Investor A
Shares................ 16,481,707 1,461,338 1,063,037 302,158 264,848 (3,492,549)
=============== =============== ============= ============= ============= =============
TRUST SHARES:
Issued................. 1,743,384,071 2,146,851,680 833,331,145 847,158,604 105,944,026 250,926,993
Reinvested............. 8,609,524 5,379,266 2,884,381 1,347,851 133,447 239,807
Redeemed............... (1,598,808,463) (2,229,026,547) (825,544,533) (862,910,449) (113,373,935) (278,436,992)
--------------- --------------- ------------- ------------- ------------- -------------
Change in Trust Shares. 153,185,132 (76,795,601) 10,670,993 (14,403,994) (7,296,462) (27,270,192)
=============== =============== ============= ============= ============= =============
INSTITUTIONAL SHARES:
Issued................. 46,450,288 30,670,816 39,942 10
Reinvested............. 125 586
Redeemed............... (43,405,997) (20,375,738) (12,200) 0
--------------- --------------- ------------- -------------
Change in Institutional
Shares................ 3,044,291 10,295,203 28,328 10
=============== =============== ============= =============
</TABLE>
Continued
-66-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
GROWTH & INCOME
EQUITY PORTFOLIO EMERGING GROWTH PORTFOLIO BALANCED PORTFOLIO
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1994 1995 1994 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares is-
sued................... $ 4,047,263 $10,096,262 $ 2,716,088 $ 7,754,386 $ 725,604 $ 7,431,899
Dividends reinvested.... 533,478 1,621,050 828,227 734,513 220,854 153,511
Shares redeemed......... (3,003,314) (2,981,458) (1,041,887) (2,036,770) (1,372,493) (2,089,854)
------------ ----------- ------------ ----------- ----------- ------------
Change in net assets
from
Investor A Share trans-
actions............... $ 1,577,427 $ 8,735,854 $ 2,502,428 $ 6,452,129 $ (426,035) $ 5,495,556
============ =========== ============ =========== =========== ============
INVESTOR B SHARES:
Proceeds from shares is-
sued................... $ 739,310 $ 605,912 $ 33,778
Dividends reinvested.... 2,484 225
Shares redeemed......... (27,250) (5,173)
------------ ------------ -----------
Change in net assets
from Investor B Share
transactions........... $ 714,544 $ 600,739 $ 34,003
============ ============ ===========
TRUST SHARES:
Proceeds from shares is-
sued................... $ 33,387,661 $53,199,040 $ 56,170,238 $32,772,092 $12,537,321 $ 15,027,556
Dividends reinvested.... 6,332,138 30,670,497 4,711,272 5,885,331 2,119,017 2,832,428
Shares redeemed......... (55,583,498) (52,894,561) (10,894,683) (5,320,777) (20,150,860) (18,285,901)
------------ ----------- ------------ ----------- ----------- ------------
Change in net assets
from Trust share trans-
actions................ $(15,863,699) $30,974,976 $ 49,986,827 $33,336,646 $(5,494,522) $ (425,917)
============ =========== ============ =========== =========== ============
INSTITUTIONAL SHARES:
Proceeds from shares is-
sued................... $ 13,872,425 35,480,210 $ 11,023,958 6,070,605 $12,929,259 26,875,359
Dividends reinvested.... 678,286 222,646 432,261 790,342 453,002
Shares redeemed......... (3,081,128) (13,344,910) (515,656) (574,066) (4,954,838) (3,359,337)
------------ ----------- ------------ ----------- ----------- ------------
Change in net assets
from Institutional
share transactions..... $ 11,469,583 22,357,946 $ 10,940,563 5,496,539 $ 8,764,763 23,969,024
============ =========== ============ =========== =========== ============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued.................. 274,340 790,063 218,241 668,173 68,078 765,106
Reinvested.............. 39,596 125,770 76,260 63,560 21,139 15,629
Redeemed................ (219,461) (228,666) (83,578) (169,563) (134,533) (212,165)
------------ ----------- ------------ ----------- ----------- ------------
Change in Investor A
Shares................. 94,475 687,167 210,923 562,170 (45,316) 568,570
============ =========== ============ =========== =========== ============
INVESTOR B SHARES:
Issued.................. 49,645 45,495 3,119
Reinvested.............. 162 20
Redeemed................ (1,719) (374)
------------ ------------ -----------
Change in Investor B
Shares................. 48,088 45,121 3,139
============ ============ ===========
TRUST SHARES:
Issued.................. 2,315,536 4,072,807 4,303,611 2,786,700 1,216,163 1,523,316
Reinvested.............. 468,940 2,370,468 433,021 518,141 203,146 285,283
Redeemed................ (3,773,562) (4,093,750) (852,124) (447,698) (1,964,748) (1,847,653)
------------ ----------- ------------ ----------- ----------- ------------
Change in Trust Shares.. (989,086) 2,349,525 3,884,508 2,857,143 (545,439) (39,054)
============ =========== ============ =========== =========== ============
INSTITUTIONAL SHARES:
Issued.................. 913,663 2,727,626 843,722 519,955 1,213,228 2,663,799
Reinvested.............. 50,081 17,374 39,913 75,476 46,490
Redeemed................ (218,049) (1,020,467) (39,849) (49,059) (485,602) (343,601)
------------ ----------- ------------ ----------- ----------- ------------
Change in Institutional
Shares................. 745,695 1,724,533 843,786 470,896 803,102 2,366,688
============ =========== ============ =========== =========== ============
</TABLE>
Continued
-67-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
GOVERNMENT & CORPORATE U.S. GOVERNMENT MISSOURI TAX-
BOND PORTFOLIO SECURITIES PORTFOLIO EXEMPT BOND PORTFOLIO
-------------------------- -------------------------- ------------------------
YEAR YEAR YEAR YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, MAY 31,
1995 1994 1995 1994 1995 1995
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares is-
sued................... $ 532,904 $ 3,401,463 $ 262,858 $3,234,885 $1,156,729 $ 2,418,111
Dividends reinvested.... 259,920 243,213 485,224 651,556 425,016 1,012,362
Shares redeemed......... (911,926) (1,785,958) (2,896,079) (2,798,849) (1,628,286) (7,808,196)
------------ ----------- ----------- ---------- ---------- -----------
Change in net assets
from
Investor A Share trans-
actions............... $ (119,102) $ 1,858,718 $(2,147,997) $1,087,592 $ (46,541) $(4,377,723)
============ =========== =========== ========== ========== ===========
INVESTOR B SHARES:
Proceeds from shares is-
sued................... $ 136,699 $ 43,386 $ 329,022 92,022
Dividends reinvested.... 1,155 436 1,975 170
Shares redeemed......... (33,852) (2,869) (1,803)
------------ ----------- ---------- -----------
Change in net assets
from Investor B Share
transactions........... $ 104,002 $ 40,953 $ 329,194 $ 92,192
============ =========== ========== ===========
TRUST SHARES:
Proceeds from shares is-
sued................... $ 17,932,992 $21,488,365 $11,497,995 $8,020,050 $6,963,566 $10,705,272
Dividends reinvested.... 5,831,411 7,080,533 1,522,604 1,913,869 183,709 353,699
Shares redeemed......... (40,412,534) (31,715,278) (3,434,036) (8,010,899) (4,591,666) (15,529,808)
------------ ----------- ----------- ---------- ---------- -----------
Change in net assets
from Trust share trans-
actions................ $(16,648,131) $(3,146,380) $ 9,586,563 $1,923,020 $2,555,609 $(4,470,837)
============ =========== =========== ========== ========== ===========
INSTITUTIONAL SHARES:
Proceeds from shares is-
sued................... $ 3,401,735 14,186,220 583,872 1,956,637
Dividends reinvested.... 403,585 289,669 20,997 3,312
Shares redeemed......... (965,170) (8,045,979) (12,541) (1,898,409)
------------ ----------- ----------- ----------
Change in net assets
from Institutional
share transactions..... $ 2,840,150 6,429,910 592,328 61,540
============ =========== =========== ==========
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued.................. 51,880 340,073 24,838 308,826 101,135 220,783
Reinvested.............. 25,848 24,088 46,390 61,298 37,072 92,504
Redeemed................ (91,838) (179,052) (275,695) (265,978) (141,933) (712,361)
------------ ----------- ----------- ---------- ---------- -----------
Change in Investor A
Shares................. (14,110) 185,109 (204,467) 104,146 (3,726) (399,074)
============ =========== =========== ========== ========== ===========
INVESTOR B SHARES:
Issued.................. 13,279 4,044 28,689 8,170
Reinvested.............. 112 41 172 15
Redeemed................ (3,279) (268) (156)
------------ ----------- ---------- -----------
Change in Investor B
Shares................. 10,112 3,817 28,705 8,185
============ =========== ========== ===========
TRUST SHARES:
Issued.................. 1,760,564 2,084,029 1,071,870 746,071 605,404 970,596
Reinvested.............. 580,575 695,858 145,303 179,795 16,020 32,327
Redeemed................ (3,962,515) (3,083,894) (322,555) (761,341) (398,603) (1,446,334)
------------ ----------- ----------- ---------- ---------- -----------
Change in Trust Shares.. (1,621,376) (304,007) 894,618 164,525 222,821 (443,411)
============ =========== =========== ========== ========== ===========
INSTITUTIONAL SHARES:
Issued.................. 331,136 1,352,995 55,800 190,163
Reinvested.............. 40,022 28,925 1,974 326
Redeemed................ (96,064) (763,144) (1,172) (185,398)
------------ ----------- ----------- ----------
Change in Institutional
Shares................. 275,094 618,776 56,602 5,091
============ =========== =========== ==========
</TABLE>
Continued
-68-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHORT
INTERMEDIATE
MUNICIPAL
PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO
---------------- -----------------------------------
JULY 10, 1995 TO YEAR ENDED APRIL 4, 1994 TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 (A) 1995 1994 (A)
---------------- --------------- -----------------
<S> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued.................. $ 10 $ 821,313 $ 834,040
Dividends reinvested..... 1,748
Shares redeemed.......... (153,976) (15,795)
----------- --------------- ---------------
Change in net assets from
Investor A Share
transactions............ $ 10 $ 669,085 $ 818,245
=========== =============== ===============
INVESTOR B SHARES:
Proceeds from shares
issued.................. $ 99,602
Dividends reinvested.....
Shares redeemed.......... (5)
---------------
Change in net assets from
Investor B Share
transactions............ $ 99,597
===============
TRUST SHARES:
Proceeds from shares
issued.................. $23,945,072 $ 13,203,803 $ 24,438,839
Dividends reinvested..... 9,378 25,940
Shares redeemed.......... (424,913) (3,599,335) (178,778)
----------- --------------- ---------------
Change in net assets from
Trust share
transactions............ $23,529,537 $ 9,630,408 $ 24,260,061
=========== =============== ===============
INSTITUTIONAL SHARES:
Proceeds from shares
issued.................. $ 1,984,397 $ 214,657
Dividends reinvested..... 389
Shares redeemed.......... (175,630) (11,420)
--------------- ---------------
Change in net assets from
Institutional share
transactions............ $ 1,809,156 $ 203,237
=============== ===============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................... 1 81,235 81,502
Reinvested............... 148
Redeemed................. (15,655) (1,579)
----------- --------------- ---------------
Change in Investor A
Shares.................. 1 65,728 79,923
=========== =============== ===============
INVESTOR B SHARES:
Issued................... 9,497
Reinvested...............
Redeemed................. (1)
---------------
Change in Investor B
Shares.................. 9,496
===============
TRUST SHARES:
Issued................... 2,399,957 1,300,301 2,412,300
Reinvested............... 938 2,669
Redeemed................. (42,604) (354,075) (17,313)
----------- --------------- ---------------
Change in Trust Shares... 2,358,291 948,895 2,394,987
=========== =============== ===============
INSTITUTIONAL SHARES:
Issued................... 197,653 21,009
Reinvested............... 40
Redeemed................. (16,687) (1,120)
--------------- ---------------
Change in Institutional
Shares.................. 181,006 19,889
=============== ===============
</TABLE>
- ------
(a) Period from commencement of operations.
Continued
-69-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
5.PURCHASES AND SALES OF INVESTMENT SECURITIES
Purchases and sales of securities (excluding short-term securities) during
the year ended November 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Growth & Income Equity............................ $170,214,672 $178,895,890
Emerging Growth................................... 155,244,000 99,793,886
Balanced.......................................... 52,511,402 53,845,218
Government & Corporate Bond....................... 69,905,767 67,305,132
U.S. Government Securities........................ 47,755,106 34,05,581
Missouri Tax-Exempt Bond*......................... 1,242,188 1,034,270
Short-Intermediate Municipal**.................... 22,576,567
International Equity.............................. 29,357,700 18,278,071
</TABLE>
------
*For the period from June 1, 1995 through November 30, 1995.
**For the period from July 10, 1995 (commencement of operations) through
November 30, 1995.
6.RELATED PARTY TRANSACTIONS
Investment advisory services are provided to the Fund by Mississippi Valley
Advisors Inc. ("MVA"), a wholly-owned subsidiary of Mercantile Bank of St.
Louis National Association ("Mercantile"), which in turn is a wholly-owned
subsidiary of Mercantile Bancorporation Inc. Under the terms of the
investment advisory agreement, MVA is entitled to receive fees based on a
percentage of the average daily net assets of the Fund. Mercantile serves
as custodian for the Fund.
BISYS Fund Services Limited Partnership d/b/a/ BISYS Fund Services
("BISYS") is an Ohio limited partnership. BISYS Fund Services Ohio, Inc.
(the "Company"), and BISYS are subsidiaries of The BISYS Group, Inc.
The Company, with whom certain officers of the Fund are affiliated, serves
the Fund as Administrator. Such officers are paid no fees directly by the
Portfolios for serving as officers. Under the terms of the administration
agreement, the Company receives fees computed at 0.20% (0.10% for the Tax-
Exempt Money Market Portfolio) of the average daily net assets of each
Portfolio. The Company serves the Fund as Transfer Agent. BISYS serves the
Fund as distributor and is entitled to receive commissions on sales of
Investor A Shares and Investor B Shares of the variable net asset value
portfolios. For the year ended November 30, 1995, BISYS received
approximately $241,369 from commissions earned on sales of Investor A
Shares and redemptions of Investor B Shares of which BISYS re-allowed
$65,524 to affiliated broker-dealers of the Fund Shares.
With respect to Investor A Shares of the Portfolios, the Fund has adopted a
Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act. Under the Plan, each portfolio may pay (i) up to 0.10% of the
average daily net assets of each Portfolio's outstanding Investor A Shares
to BISYS or another organization for distribution services performed and
expenses assumed relating to the Fund's Investor A shares and (ii) up to
0.20% (0.15% for the money market portfolios) of the average daily net
assets of each Portfolio's outstanding Investor A Shares to broker-dealers
and other organizations for shareholder administrative services provided
pursuant to servicing agreements under the Plan. With respect to the
Missouri Tax-Exempt Bond Portfolio, BISYS voluntarily waived $12,092 of
distribution and services fees applicable to Investor A Shares.
Continued
-70-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
Similarly, with respect to Investor B Shares, the Fund has adopted a
Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act. Under the Plan, each portfolio may pay (i) up to 0.75% of the
average daily net assets of each Portfolio's outstanding Investor B Shares
to BISYS or another organization for distribution services performed and
expenses assumed relating to the Fund's Investor B Shares and (ii) up to
0.25% of the average daily net assets of each Portfolio's Investor B Shares
to broker- dealers and other organizations for shareholder administrative
services provided pursuant to servicing agreements under the Plan.
With respect to Trust and Institutional Shares of the Portfolios, the Fund
has adopted separate Administrative Services Plans pursuant to which Trust
Shares are sold to banks and other financial institutions on behalf of
their qualified accounts and Institutional Shares are sold to banks and
other financial institutions acting on behalf of their accounts for which
they do not exercise investment discretion. The Portfolios may pay these
banks and other financial institutions, which have agreed to provide
certain shareholder administrative services for their clients or account
holders, up to 0.30% (0.25% for money market portfolios) of the average
daily net assets of each Portfolio's Trust or Institutional Shares,
respectively.
Fees may be voluntarily reduced to assist the Portfolios in maintaining
competitive expense ratios.
Information regarding these transaction is as follows for the year ended
November 30, 1995:
<TABLE>
<CAPTION>
INVESTMENT ADMINISTRATION
ADVISORY FEES FEES
--------------------- --------------
ANNUAL FEE
BEFORE
VOLUNTARY VOLUNTARY FUND
FEE FEE VOLUNTARY FEE CUSTODIAN ACCOUNTING TRANSFER
REDUCTIONS REDUCTIONS REDUCTIONS FEES FEES AGENT FEES
---------- ---------- -------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Money Market Portfolio.. 0.40% $314,865 $629,432 $85,562 $ 1,025 $105,111
Treasury Money Market
Portfolio.............. 0.40% 124,279 230,045 30,549 365 38,004
Tax-Exempt Money Market
Portfolio*............. 0.40% 23,094 7,725 494 12,139
Growth & Income
Portfolio.............. 0.55% 316,168 96,612 4,777 54,382
Emerging Growth
Portfolio.............. 0.75% 128,825 42,782 4,779 20,825
Balanced Portfolio...... 0.75% 103,589 31,481 9,070 18,154
Government & Corporate
Bond Portfolio......... 0.45% 147,087 44,211 10,106 26,254
U.S. Government
Securities Portfolio... 0.45% 46,322 14,417 6,465 8,229
Missouri Tax-Exempt Bond
Portfolio*............. 0.45% 34,808 10,773 4,096 9,262
Short-Intermediate
Municipal Portfolio**.. 0.45% 38,167 6,914 2,375 1,885 1,471
International Equity
Portfolio.............. 1.00% 78,752 15,950 55,398 1,894 5,026
</TABLE>
------
*For the period June 1, 1995 through November 30, 1995.
**For the period July 10, 1995 (commencement of operations) through
November 30, 1995.
Continued
-71-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
7.CONCENTRATION OF CREDIT RISK
The Missouri Tax-Exempt Bond Portfolio invests a substantial proportion of
its assets in debt obligations issued by the State of Missouri and its
political subdivisions, agencies and public authorities. The Portfolio is
more susceptible to factors adversely affecting issuers of Missouri
municipal securities than a fund that is not concentrated in these issuers
to the same extent.
8.FEDERAL INCOME TAX INFORMATION (UNAUDITED)
The Fund designates the following eligible distributions for the dividends
received deduction for corporations for the taxable year ended November 30,
1995:
<TABLE>
<CAPTION>
DISTRIBUTIONS FROM
DIVIDEND DIVIDEND INCOME
INCOME PER SHARE
---------- ------------------
<S> <C> <C>
Growth & Income Equity Portfolio............... $6,932,220
Investor A Shares............................. $0.19
Investor B Shares............................. 0.12
Trust Shares.................................. 0.22
Institutional Shares.......................... 0.20
Balanced Portfolio............................. 1,397,318
Investor A Shares............................. 0.10
Investor B Shares............................. 0.07
Trust Shares.................................. 0.11
Institutional Shares.......................... 0.10
</TABLE>
The Fund designates the following exempt-interest dividends for the period
ended November 30, 1995:
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MISSOURI TAX-EXEMPT SHORT-INTERMEDIATE
MARKET PORTFOLIO* BOND PORTFOLIO* MUNICIPAL PORTFOLIO**
----------------- ------------------- ---------------------
<S> <C> <C> <C>
Exempt-interest
dividends:
Investor A Shares....... $ 80,107 $ 536,859
Investor B Shares....... 5,304
Trust Shares............ 1,322,112 1,027,986 $264,123
Exempt-interest
dividends per share:
Investor A Shares....... 0.014 0.254
Investor B Shares....... 0.211
Trust Shares............ 0.015 0.265 0.141
</TABLE>
------
*For the period from June 1, 1995 through November 30, 1995.
**For the period from July 10, 1995 (commencement of operations) through
November 30, 1995.
As of November 30, 1995, for Federal income tax purposes, the following
Funds have capital loss carryforwards available to offset future capital
gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
AMOUNT EXPIRE:
------ -------
<S> <C> <C>
Government & Corporate Bond Portfolio......................... 936 2002
Government & Corporate Bond Portfolio......................... 1,121 2003
Missouri Tax-Exempt Bond Portfolio............................ 124 2002
Missouri Tax-Exempt Bond Portfolio............................ 190 2003
International Equity Portfolio................................ 734 2003
</TABLE>
Continued
-72-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1995
The percentage break-down of exempt-interest income by state for the period
ended November 30, 1995 is as follows:
<TABLE>
<CAPTION>
SHORT-
TAX-EXEMPT MISSOURI INTERMEDIATE
MONEY MARKET TAX-EXEMPT BOND MUNICIPAL
FUND PORTFOLIO PORTFOLIO
----------------- ----------------- -----------------
JUNE 1, 1995 TO JUNE 1, 1995 TO JULY 10, 1995 TO
NOVEMBER 30, 1995 NOVEMBER 30, 1995 NOVEMBER 30, 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Alabama............... 0.85%
Alaska................ 1.45%
Arizona............... 0.42% 0.52%
California............ 1.47%
Colorado.............. 2.22% 1.98%
Florida............... 3.61% 1.17%
Georgia............... 9.55%
Illinois.............. 5.38% 8.01%
Indiana............... 2.23% 2.49%
Iowa.................. 2.15%
Kentucky.............. 1.59%
Louisiana............. 3.21% 2.52%
Maine................. 3.35%
Maryland.............. 2.77%
Michigan.............. 6.98% 7.42%
Minnesota............. 7.02% 4.33%
Mississippi........... 0.64% 1.06%
Missouri.............. 22.29% 94.01% 2.82%
Montana............... 4.07%
Nebraska.............. 2.99%
Nevada................ 5.36%
New Mexico............ 4.62%
New York.............. 2.61%
North Carolina........ 0.99%
Pennsylvania.......... 7.64% 4.10%
Puerto Rico........... 5.99%
Rhode Island.......... 3.00%
South Carolina........ 2.22%
South Dakota.......... 3.62%
Tennessee............. 1.24% 0.17%
Texas................. 13.31% 11.13%
Utah.................. 0.68%
Vermont............... 1.41%
Virginia.............. 1.89% 5.94%
Washington............ 1.92% 6.93%
Wisconsin............. 4.26%
Wyoming............... 0.08% 0.32%
------ ------ ------
100.00% 100.00% 100.00%
====== ====== ======
</TABLE>
-73-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
See notes to financial statements.
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------
1995 1994 (A) 1993 1992 1991
---------- ---------- -------- -------- --------
INVESTOR A INVESTOR A INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income........ 0.052 0.033 0.025 0.032 0.056
------- ------- ------- ------- -------
Distributions
Net investment income........ (0.052) (0.033) (0.025) (0.032) (0.056)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERI-
OD........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return.................. 5.33% 3.37% 2.52% 3.21% 5.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................ $64,865 $48,384 $46,920 $52,224 $60,436
Ratio of expenses to average
net assets................... 0.77% 0.78% 0.79% 0.80% 0.72%
Ratio of net investment income
to average net assets........ 5.20% 3.35% 2.50% 3.21% 5.69%
Ratio of expenses to average
net assets*.................. 0.92% 0.93% 0.93% 0.94% 0.80%
Ratio of net investment income
to average net assets*....... 5.05% 3.20% 2.36% 3.07% 5.61%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a)On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
-74-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Investment Activities
Net investment income....... 0.054 0.035 0.026 0.034 0.058
-------- -------- -------- -------- --------
Distributions
Net investment income....... (0.054) (0.035) (0.026) (0.034) (0.058)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return................. 5.52% 3.55% 2.72% 3.44% 5.95%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)....................... $698,131 $544,952 $621,717 $574,941 $700,474
Ratio of expenses to average
net assets.................. 0.59% 0.61% 0.59% 0.57% 0.59%
Ratio of net investment
income to average net
assets...................... 5.38% 3.45% 2.70% 3.44% 5.81%
Ratio of expenses to average
net assets*................. 0.74% 0.93% 0.80% 0.71% 0.67%
Ratio of net investment
income to average net
assets*..................... 5.23% 3.13% 2.49% 3.30% 5.73%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-75-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------------
1995 1994 (A) 1993 1992 1991
------------- ------------- -------- -------- --------
INSTITUTIONAL INSTITUTIONAL INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.052 0.033 0.025 0.032 0.056
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.052) (0.033) (0.025) (0.032) (0.056)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return............ 5.33% 3.34% 2.52% 3.21% 5.75%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $13,340 $10,295 $46,920 $52,224 $60,436
Ratio of expenses to
average net assets..... 0.77% 0.78% 0.79% 0.80% 0.72%
Ratio of net investment
income to average net
assets................. 5.20% 3.48% 2.50% 3.21% 5.69%
Ratio of expenses to
average net assets*.... 0.92% 0.95% 0.93% 0.94% 0.80%
Ratio of net investment
income to average net
assets*................ 5.05% 3.31% 2.36% 3.07% 5.61%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on January 3, 1994, the
Portfolio issued a new series of shares which were designated as
"Institutional" Shares. The financial highlights presented for the periods
prior to January 3, 1994 represent financial highlights applicable to the
Investor Shares.
See notes to financial statements.
-76-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------
DECEMBER 2, 1991
TO NOVEMBER 30,
1995 1994 (A) 1993 1992 (B)(C)
---------- ---------- -------- ----------------
INVESTOR A INVESTOR A INVESTOR INVESTOR
SHARES SHARES SHARES SHARES
---------- ---------- -------- ----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------
Investment Activities
Net investment income......... 0.048 0.031 0.024 0.017
------ ------ ------ ------
Distributions
Net investment income......... (0.048) (0.031) (0.024) (0.017)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD. $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ======
Total Return................... 4.93% 3.16% 2.43% 1.79%(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)......................... $2,776 $1,713 $1,411 $3,257
Ratio of expenses to average
net assets.................... 0.78% 0.71% 0.64% 0.58%(e)
Ratio of net investment income
to average net assets......... 4.84% 3.14% 2.41% 2.88%(e)
Ratio of expenses to average
net assets*................... 0.93% 0.94% 0.97% 1.02%(e)
Ratio of net investment income
to average net assets*........ 4.69% 2.90% 2.08% 2.44%(e)
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Period from commencement of operations.
(c) On December 2, 1991, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on April 20, 1992, the
Portfolio issued a second series of shares which were designated as
"Investor" Shares. The financial highlights presented for the period prior
to April 20, 1992 represent financial highlights applicable to the Trust
Shares.
(d) Not annualized.
(e) Annualized.
See notes to financial statements.
-77-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30, DECEMBER 2, 1991
---------------------------- TO NOVEMBER 30,
1995 1994 1993 1992 (A)(B)
-------- -------- -------- ----------------
TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Investment Activities
Net investment income.......... 0.050 0.033 0.026 0.034
-------- -------- -------- --------
Distributions
Net investment income.......... (0.050) (0.033) (0.026) (0.034)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD.. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return.................... 5.12% 3.38% 2.67% 3.16%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000).......................... $252,780 $242,099 $256,503 $229,288
Ratio of expenses to average net
assets......................... 0.60% 0.49% 0.41% 0.28%(d)
Ratio of net investment income
to average net assets.......... 5.01% 3.26% 2.64% 3.35%(d)
Ratio of expenses to average net
assets*........................ 0.75% 0.94% 0.85% 0.72%(d)
Ratio of net investment income
to average net assets*......... 4.86% 2.82% 2.21% 2.91%(d)
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) On December 2, 1991, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on April 20, 1992, the
Portfolio issued a second series of shares which were designated as
"Investor" Shares.
(c) Not annualized.
(d) Annualized.
See notes to financial statements.
-78-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 26, 1995
TO NOVEMBER 30,
1995 (A)
----------------
INSTITUTIONAL
SHARES
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 1.00
------
Investment Activities
Net investment income......................................... 0.042
------
Distributions
Net investment income......................................... (0.042)
------
NET ASSET VALUE, END OF PERIOD................................. $ 1.00
======
Total Return................................................... 4.94%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).............................. $ 28
Ratio of expenses to average net assets........................ 0.92%(c)
Ratio of net investment income to average net assets........... 5.76%(c)
Ratio of expenses to average net assets*....................... 1.07%(c)
Ratio of net investment income to average net assets*.......... 5.61%(c)
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
January 25, 1995 plus the total return for the Institutional Shares from
January 26, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements.
-79-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, -----------------------------------------------
1995 (E) 1995 (A) 1994 1993 1992 1991 (B)
---------------- ---------- -------- -------- -------- --------
INVESTOR A INVESTOR A INVESTOR INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------- ------
Investment Activities
Net investment income.. 0.014 0.027 0.017 0.019 0.031 0.047
------ ------ ------ ------ ------- ------
Distributions
Net investment income.. (0.014) (0.027) (0.017) (0.019) (0.031) (0.047)
------ ------ ------ ------ ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======= ======
Total Return............ 1.45%(c) 2.70% 1.73% 1.90% 3.16% 4.82%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $5,403 $5,138 $8,631 $6,837 $10,956 $8,286
Ratio of expenses to
average
net assets............. 0.94%(d) 0.84% 0.76% 0.80% 0.87% 0.58%
Ratio of net investment
income to average net
assets................. 2.87%(d) 2.63% 1.72% 1.88% 3.10% 5.09%
Ratio of expenses to
average net assets*.... 0.99%(d) 0.93% 0.86% 0.90% 0.97% 0.68%
Ratio of net investment
income to average net
assets*................ 2.82%(d) 2.54% 1.62% 1.78% 3.00% 4.99%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated Investor shares as
"Investor A" shares.
(b) During the period June 1, 1990 through September 27, 1990 the Portfolio
was authorized to issue only one class of shares, Class A shares (formerly
known as "Money" shares). As of September 28, 1990 the Portfolio
redesignated such Class A shares as "Investor" shares. "Investor A" and
"Investor" shares bear characteristics similar to those shares which were
formerly known as "Dollar" shares. Therefore, the financial highlights
presented for those periods prior to September 28, 1990 represent
financial highlights applicable to those shares formerly known as "Dollar"
shares.
(c) Not annualized.
(d) Annualized.
(e) Upon merging into the Arch Fund, Inc., the Tax-Exempt Money Market
Portfolio changed its fiscal year end from May 31 to November 30.
See notes to financial statements.
-80-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, -----------------------------------------------
1995 (D) 1995 1994 1993 1992 1991 (A)
---------------- ------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES SHARES
---------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.016 0.029 0.020 0.021 0.034 0.031
-------- ------- -------- -------- -------- --------
Distributions
Net investment income.. (0.016) (0.029) (0.020) (0.021) 0.034 0.031
-------- ------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======== ======== ======== ========
Total Return............ 1.57%(b) 2.93% 1.97% 2.16% 3.44% 2.25%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $ 78,031 $85,324 $112,594 $137,602 $126,079 $137,847
Ratio of expenses to
average
net assets............. 0.70%(c) 0.61% 0.52% 0.52% 0.59% 0.58%
Ratio of net investment
income to average net
assets................. 3.10%(c) 2.87% 1.95% 2.13% 3.38% 4.65%
Ratio of expenses to
average net assets*.... 0.75%(c) 0.70% 0.86% 0.62% 0.69% 0.68%
Ratio of net investment
income to average net
assets*................ 3.05%(c) 2.78% 1.61% 2.03% 3.28% 4.55%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) "Trust" shares were originally issued as "Money" shares. As of September
28, 1990 the Portfolio issued a second series of shares, Class A--Special
Series 1, which were designated as "Trust" shares. "Trust" shares bear
characteristics similar to those shares which were formerly known as
"Money" shares. Therefore, the financial highlights presented for those
periods prior to September 28, 1990 represent financial highlights
applicable to those shares formerly known as "Money" shares.
(b) Not annualized.
(c) Annualized.
(d) Upon merging into the Arch Fund, Inc., the Tax-Exempt Money Market
Portfolio changed its fiscal year end from May 31 to November 30.
See notes to financial statements.
-81-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------------------------
1995 1994 (A) 1993 1992 1991
---------- ---------- -------- -------- --------
INVESTOR A INVESTOR A INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 12.70 $ 14.74 $ 14.49 $12.33 $11.22
------- ------- ------- ------ ------
Investment Activities
Net investment income........ 0.23 0.20 0.25 0.25 0.39
Net realized and unrealized
gains (losses) from
investments.................. 3.74 (0.17) 1.06 2.24 1.47
------- ------- ------- ------ ------
Total from Investment
Activities................... 3.97 0.03 1.31 2.49 1.86
------- ------- ------- ------ ------
Distributions
Net investment income........ (0.23) (0.21) (0.25) (0.26) (0.39)
Net realized gains........... (0.14) (0.18) (0.81) (0.07) (0.36)
In excess of net realized
gains........................ (1.68)
------- ------- ------- ------ ------
Total Distributions......... (0.37) (2.07) (1.06) (0.33) (0.75)
------- ------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD....................... $ 16.30 $ 12.70 $ 14.74 $14.49 $12.33
======= ======= ======= ====== ======
Total Return (excludes sales
charges)..................... 31.95% 0.20% 9.65% 20.59% 17.39%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................ $25,082 $18,343 $11,157 $6,044 $3,254
Ratio of expenses to average
net assets................... 1.05% 1.05% 0.74% 0.71% 0.34%
Ratio of net investment income
to average net assets........ 1.59% 1.45% 1.74% 1.94% 3.50%
Ratio of expenses to average
net assets*.................. 1.15% 1.15% 0.96% 0.85% 1.05%
Ratio of net investment income
to average net assets*....... 1.49% 1.35% 1.52% 1.80% 2.79%
Portfolio turnover............ 58.50% 65.00% 41.00% 79.00% 78.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares and authorized the issuance of a series of shares
designated as "Investor B" Shares.
See notes to financial statements.
-82-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MARCH 1, 1995 TO
NOVEMBER 30,
1995 (A)
----------------
INVESTOR B
SHARES
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $13.43
------
Investment Activities
Net investment income......................................... 0.14
Net realized and unrealized gains from investments............ 2.81
------
Total from Investment Activities............................. 2.95
------
Distributions
Net investment income......................................... (0.15)
------
Total Distributions.......................................... (0.15)
------
NET ASSET VALUE, END OF PERIOD................................. $16.23
======
Total Return (excludes sales charges).......................... 31.20%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).............................. $ 781
Ratio of expenses to average net assets........................ 1.75%(c)
Ratio of net investment income to average net assets........... 0.87%(c)
Ratio of expenses to average net assets*....................... 1.85%(c)
Ratio of net investment income to average net assets*.......... 0.77%(c)
Portfolio turnover............................................. 58.50%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio authorized the issuance of a series of shares designated as
"Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements.
-83-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------------------
1995 1994 1993 1992 1991 (A)
-------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 12.72 $ 14.74 $ 14.49 $ 12.33 $ 12.24
-------- -------- -------- -------- --------
Investment Activities
Net investment income....... 0.27 0.22 0.25 0.24 0.22
Net realized and unrealized
gains (losses) from
investments................ 3.74 (0.17) 1.06 2.25 0.03
-------- -------- -------- -------- --------
Total from Investment
Activities................ 4.01 0.05 1.31 2.49 0.25
-------- -------- -------- -------- --------
Distributions
Net investment income....... (0.27) (0.21) (0.25) (0.26) (0.16)
Net realized gains.......... (0.14) (0.18) (0.81) (0.07)
In excess of net realized
gains....................... (1.68)
-------- -------- -------- -------- --------
Total Distributions........ (0.41) (2.07) (1.06) (0.33) (0.16)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD...................... $ 16.32 $ 12.72 $ 14.74 $ 14.49 $ 12.33
======== ======== ======== ======== ========
Total Return................. 32.27% 0.36% 9.65% 20.59% 17.39%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)....................... $286,546 $235,955 $238,771 $232,967 $139,021
Ratio of expenses to average
net assets.................. 0.75% 0.75% 0.74% 0.71% 0.27%
Ratio of net investment
income to average net
assets...................... 1.89% 1.72% 1.74% 1.94% 2.56%
Ratio of expenses to average
net assets*................. 0.85% 1.15% 0.96% 0.85% 0.91%
Ratio of net investment
income to average net
assets*..................... 1.79% 1.32% 1.52% 1.80% 1.92%
Portfolio turnover........... 58.50% 65.00% 41.00% 79.00% 78.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on April 1, 1991, the Portfolio
issued a second series of shares which were designated as "Trust" Shares.
Financial highlights presented for the period prior to April 1, 1991
represent financial highlights applicable to the Investor Shares.
See notes to financial statements.
-84-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------------------------------
1995 1994 (A) 1993 1992 1991
------------- ------------- -------- -------- --------
INSTITUTIONAL INSTITUTIONAL INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 12.70 $ 14.74 $ 14.49 $12.33 $11.22
------- ------- ------- ------ ------
Investment Activities
Net investment income.. 0.23 0.20 0.25 0.25 0.39
Net realized and
unrealized gains
(losses) from
investments........... 3.74 (0.17) 1.06 2.24 1.47
------- ------- ------- ------ ------
Total from Investment
Activities........... 3.97 (0.03) 1.31 2.49 1.86
------- ------- ------- ------ ------
Distributions
Net investment income.. (0.24) (0.21) (0.25) (0.26) (0.39)
Net realized gains..... (0.14) (0.18) (0.81) (0.07) (0.36)
In excess of net
realized gains........ (1.68)
------- ------- ------- ------ ------
Total Distributions... (0.38) (2.07) (1.06) (0.33) (0.75)
------- ------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 16.29 $ 12.70 $ 14.74 $14.49 $12.33
======= ======= ======= ====== ======
Total Return............ 31.88% 0.19% 9.65% 20.59% 17.39%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $40,228 $21,897 $11,157 $6,044 $3,254
Ratio of expenses to
average net assets..... 1.05% 1.05% 0.74% 0.71% 0.34%
Ratio of net investment
income to average net
assets................. 1.58% 1.41% 1.74% 1.94% 3.50%
Ratio of expenses to
average net assets*.... 1.15% 1.16% 0.96% 0.85% 1.05%
Ratio of net investment
income to average
net assets*............ 1.48% 1.30% 1.52% 1.80% 2.79%
Portfolio turnover...... 58.50% 65.00% 41.00% 79.00% 78.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on January 3, 1994, the
Portfolio issued a new series of shares designated as "Institutional"
Shares. The financial highlights presented for periods prior to January 3,
1994 represent financial highlights applicable to the Investor Shares.
See notes to financial statements.
-85-
<PAGE>
THE ARCH FUND, INC.
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EMERGING GROWTH PORTFOLIO BALANCED PORTFOLIO
--------------------------------------------------- ---------------------------------------
MAY 6, 1992 APRIL 1, 1993
YEAR ENDED YEAR ENDED YEAR ENDED TO YEAR ENDED YEAR ENDED TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1994 (A) 1993 1992 (B)(C) 1995 1994 (A) 1993 (B)
------------ ------------ ------------ ------------ ------------ ------------ -------------
INVESTOR A INVESTOR A INVESTOR INVESTOR INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.99 $ 13.14 $11.23 $10.10 $ 9.61 $10.22 $10.00
------- ------- ------ ------ ------ ------ ------
Investment Activities
Net investment income
(loss)................ (0.03) 0.03 0.02 0.32 0.28 0.23
Net realized and
unrealized gains
(losses) from
investments........... 2.36 0.89 2.14 1.13 2.02 (0.47) 0.15
------- ------- ------ ------ ------ ------ ------
Total from Investment
Activities............. 2.36 0.86 2.17 1.15 2.34 (0.19) 0.38
------- ------- ------ ------ ------ ------ ------
Distributions
Net investment income.. (0.05) (0.02) (0.30) (0.29) (0.16)
Net realized gains..... (0.91) (1.78) (0.21)
In excess of net
realized gains........ (0.23) (0.13)
------- ------- ------ ------ ------ ------ ------
Total Distributions.... (0.91) (2.01) (0.26) (0.02) (0.30) (0.42) (0.16)
------- ------- ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 13.44 $ 11.99 $13.14 $11.23 $11.65 $ 9.61 $10.22
======= ======= ====== ====== ====== ====== ======
Total Return (excludes
sales charges)......... 21.47% 7.38% 19.75% 12.55%(d) 24.85% (1.91%) 3.86%(d)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $15,056 $10,899 $4,559 $ 753 $8,348 $7,321 $1,978
Ratio of expenses to
average net assets..... 1.26% 1.25% 0.61% 0.30%(e) 1.27% 1.27% 0.56%(e)
Ratio of net investment
income (loss) to
average net assets..... (0.12%) (0.44%) 0.19% 0.78%(e) 2.98% 2.77% 3.42%(e)
Ratio of expenses to
average net assets*.... 1.36% 1.36% 1.23% 1.12%(e) 1.37% 1.39% 1.21%(e)
Ratio of net investment
income (loss) to
average net assets*.... (0.22%) (0.55%) (0.43%) (0.04%)(e) 2.88% 2.65% 2.77%(e)
Portfolio turnover...... 83.13% 85.00% 65.00% 56.00% 58.16% 49.00% 26.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Period from commencement of operations.
(c) On May 6, 1992, the Emerging Growth Portfolio issued a series of shares
which were designated as "Investor" Shares.
(d) Not annualized.
(e) Annualized.
See notes to financial statements.
-86-
<PAGE>
THE ARCH FUND, INC.
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EMERGING GROWTH BALANCED
PORTFOLIO PORTFOLIO
---------------- ----------------
MARCH 1, 1995 TO MARCH 1, 1995 TO
NOVEMBER 30, NOVEMBER 30,
1995 (A) 1995 (A)
---------------- ----------------
INVESTOR B INVESTOR B
SHARES SHARES
---------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........... $11.83 $10.13
------ ------
Investment Activities
Net investment income (loss).................. (0.03) 0.22
Net realized and unrealized gains from
investments.................................. 1.57 1.44
------ ------
Total from Investment Activities............. 1.54 1.66
------ ------
Distributions
Net investment income......................... (0.20)
------ ------
Total Distributions.......................... (0.20)
------ ------
NET ASSET VALUE, END OF PERIOD................. $13.37 $11.59
====== ======
Total Return (excludes sales charges).......... 20.83%(b) 23.92%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).............. $ 603 $ 36
Ratio of expenses to average net assets........ 1.96%(c) 1.93%(c)
Ratio of net investment income (loss) to
average net asset............................. (0.78%)(c) 2.28%(c)
Ratio of expenses to average net assets*....... 2.06%(c) 2.03%(c)
Ratio of net investment income (loss) to
average net asset............................. (0.88%)(c) 2.18%(c)
Portfolio turnover............................. 83.13% 58.16%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio authorized the issuance of a series of shares designated as
"Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements.
-87-
<PAGE>
THE ARCH FUND, INC.
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EMERGING GROWTH PORTFOLIO BALANCED PORTFOLIO
----------------------------------------------------- ------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED MAY 1, 1992 TO YEAR ENDED YEAR ENDED APRIL 1, 1993 TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1994 1993 1992 (A) 1995 1994 1993 (A)
------------ ------------ ------------ -------------- ------------ ------------ ----------------
TRUST TRUST TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------------ ------------ ------------ -------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 12.01 $ 13.14 $ 11.23 $ 10.00 $ 9.62 $ 10.22 $10.00
-------- ------- ------- ------- ------- ------- -------
Investment Activities
Net investment income
(loss)................ 0.03 (0.01) 0.03 0.04 0.34 0.29 0.23
Net realized and
unrealized gains
(losses) from
investments........... 2.36 0.89 2.14 1.21 2.02 (0.47) 0.15
-------- ------- ------- ------- ------- ------- -------
Total from Investment
Activities........... 2.39 0.88 2.17 1.25 2.36 (0.18) 0.38
-------- ------- ------- ------- ------- ------- -------
Distributions
Net investment income.. (0.05) (0.02) (0.34) (0.29) (0.16)
Net realized gains..... (0.91) (1.78) (0.21)
In excess of net
realized gains........ (0.23) (0.13)
-------- ------- ------- ------- ------- ------- -------
Total Distributions.... (0.91) (2.01) (0.26) (0.02) (0.34) (0.42) (0.16)
-------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 13.49 $ 12.01 $ 13.14 $ 11.23 $ 11.64 $ 9.62 $ 10.22
======== ======= ======= ======= ======= ======= =======
Total Return............ 21.70% 7.56% 19.75% 12.55%(b) 24.97% (1.81%) (3.86%)(b)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $139,681 $77,690 $47,473 $26,829 $72.669 $65,288 $69,720
Ratio of expenses to
average net assets..... 0.96% 0.95% 0.61% 0.30%(c) 0.98% 0.97% 0.56%(c)
Ratio of net investment
income (loss) to
average net asset...... 0.18% (0.16%) 0.19% 0.78%(c) 3.29% 3.04% 3.42%(c)
Ratio of expenses to
average net assets*.... 1.06% 1.36% 1.23% 1.12%(c) 1.08% 1.39% 1.21%(c)
Ratio of net investment
income (loss) to
average net asset...... 0.08% (0.56%) (0.43%) (0.04%)(c) 3.19% 2.63% 2.77%(c)
Portfolio turnover...... 83.13% 85.00% 65.00% 56.00% 58.16% 49.00% 26.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-88-
<PAGE>
THE ARCH FUND, INC.
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EMERGING GROWTH PORTFOLIO BALANCED PORTFOLIO
------------------------------------------------------- -------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED MAY 6, 1992 TO YEAR ENDED YEAR ENDED APRIL 1 1993 TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1995 1994 (A) 1993 1992 (B) 1995 1994 (C) 1993 (B)
------------- ------------- ------------ -------------- ------------- ------------- ---------------
INSTITUTIONAL INSTITUTIONAL INVESTOR INVESTOR INSTITUTIONAL INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------------- ------------- ------------ -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............. $ 11.96 $13.14 $11.23 $10.10 $ 9.60 $ 10.22 $10.00
------- ------ ------ ------ ------- ------- ------
Investment Activi-
ties
Net investment in-
come (loss).......... (0.01) (0.03) 0.03 0.02 0.31 0.28 0.23
Net realized and
unrealized gains
(losses) from in-
vestments.......... 2.36 0.86 2.14 1.13 2.02 (0.48) 0.15
------- ------ ------ ------ ------- ------- ------
Total from
Investment
Activities........ 2.35 0.83 2.17 1.15 2.33 (0.20) 0.38
------- ------ ------ ------ ------- ------- ------
Distributions
Net investment in-
come............... (0.05) (0.02) (0.31) (0.29) (0.16)
Net realized gains.. (0.91) (1.78) (0.21)
In excess of net re-
alized gains....... (0.23) (0.13)
------- ------ ------ ------ ------- ------- ------
Total Distribu-
tions............. (0.91) (2.01) (0.26) (0.02) (0.31) (0.42) (0.16)
------- ------ ------ ------ ------- ------- ------
NET ASSET VALUE, END
OF PERIOD.......... $ 13.40 $11.96 $13.14 $11.23 $ 11.62 $ 9.60 $10.22
======= ====== ====== ====== ======= ======= ======
Total Return........ 21.43% 7.11% 19.75% 12.55%(d) 24.67% (2.00%) 3.86%(d)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)....... $17,620 $5,633 $4,559 $ 753 $36,827 $22,723 $1,978
Ratio of expenses to
average net assets. 1.26% 1.25% 0.61% 0.30%(e) 1.27% 1.27% 0.56%(e)
Ratio of net invest-
ment income (loss)
to average net as-
set................ (0.11%) (0.41%) 0.19% 0.78%(e) 2.97% 2.77% 3.42%(e)
Ratio of expenses to
average net as-
sets*.............. 1.36% 1.37% 1.23% 1.12%(e) 1.37% 1.40% 1.21%(e)
Ratio of net invest-
ment income (loss)
to average net as-
set................ (0.21%) (0.53%) (0.43%) (0.04%)(e) 2.87% 2.64% 2.77%(e)
Portfolio turnover.. 83.13% 85.00% 65.00% 56.00% 58.16% 49.00% 26.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On May 6, 1992 the Emerging Growth Portfolio issued a series of shares
designated as "Investor" Shares. In addition, on January 3, 1994, the
Portfolio issued a new series of shares designated as "Institutional"
Shares. The financial highlights presented for periods prior to January 3,
1994 represent financial highlights applicable to the Investor Shares.
(b) Period from commencement of operations.
(c) The Balanced Portfolio issued a series of shares designated as "Investor"
Shares on April 1, 1993. In addition, on January 3, 1994, the Portfolio
issued a new series of shares designated as "Institutional" Shares. The
financial highlights presented for periods prior to January 3, 1994
represent financial highlights applicable to the Investor Shares.
(d) Not annualized.
(e) Annualized.
See notes to financial statements.
-89-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------------------
1995 1994 (A) 1993 1992 1991
---------- ---------- -------- -------- --------
INVESTOR A INVESTOR A INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 9.64 $10.65 $10.26 $10.15 $ 9.71
------ ------ ------ ------ ------
Investment Activities
Net investment income........ 0.61 0.60 0.64 0.66 0.75
Net realized and unrealized
gains (losses) from
investments................. 0.89 (0.94) 0.39 0.11 0.48
------ ------ ------ ------ ------
Total from Investment
Activities................. 1.50 (0.34) 1.03 0.77 1.23
------ ------ ------ ------ ------
Distributions
Net investment income........ (0.61) (0.60) (0.64) (0.66) (0.79)
In excess of net realized
gains....................... (0.07)
------ ------ ------ ------ ------
Total Distributions......... (0.61) (0.67) (0.64) (0.66) (0.79)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD....................... $10.53 $ 9.64 $10.65 $10.26 $10.15
====== ====== ====== ====== ======
Total Return (excludes sales
charges)..................... 15.98% (3.32%) 10.23% 7.81% 12.79%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................ $5,496 $5,167 $3,737 $2,490 $2,010
Ratio of expenses to average
net assets................... 0.95% 0.95% 0.95% 0.93% 0.59%
Ratio of net investment income
to average
net assets................... 6.03% 6.00% 6.00% 6.45% 7.77%
Ratio of expenses to average
net assets*.................. 1.05% 1.05% 1.05% 1.06% 1.14%
Ratio of net investment income
to average
net assets*.................. 5.93% 5.90% 5.90% 6.32% 7.22%
Portfolio turnover............ 59.32% 50.00% 31.00% 52.00% 105.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares and authorized the issuance of a series of shares
designated as "Investor B" Shares.
See notes to financial statements.
-90-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MARCH 1, 1995 TO
NOVEMBER 30,
1995 (A)
----------------
INVESTOR B
SHARES
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 9.92
------
Investment Activities
Net investment income......................................... 0.38
Net realized and unrealized gains from investments............ 0.61
------
Total from Investment Activities............................. 0.99
------
Distributions
Net investment income......................................... (0.38)
------
Total Distributions.......................................... (0.38)
------
NET ASSET VALUE, END OF PERIOD................................. $10.53
======
Total Return (excludes sales charges).......................... 15.27%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).............................. $ 106
Ratio of expenses to average net assets........................ 1.65%(c)
Ratio of net investment income to average net assets........... 5.19%(c)
Ratio of expenses to average net assets*....................... 1.75%(c)
Ratio of net investment income to average net assets*.......... 5.09%(c)
Portfolio turnover............................................. 59.32%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio redesignated the Investor Shares as "Investor A" Shares and
authorized the issuance of a series of shares designated as "Investor B"
Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements.
-91-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------------------------
1995 1994 1993 1992 1991 (A)
-------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 9.64 $ 10.65 $ 10.26 $ 10.15 $ 9.84
-------- -------- -------- -------- -------
Investment Activities
Net investment income....... 0.64 0.63 0.68 0.70 0.64
Net realized and unrealized
gains (losses) from
investments................ 0.89 (0.94) 0.39 0.11 0.31
-------- -------- -------- -------- -------
Total from Investment
Activities.................. 1.53 (0.31) 1.07 0.81 0.95
-------- -------- -------- -------- -------
Distributions
Net investment income....... (0.64) (0.63) (0.68) (0.70) (0.64)
In excess of net realized
gains....................... (0.07)
-------- -------- -------- -------- -------
Total Distributions........ (0.64) (0.70) (0.68) (0.70) (0.64)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF
PERIOD...................... $ 10.53 $ 9.64 $ 10.65 $ 10.26 $ 10.15
======== ======== ======== ======== =======
Total Return................. 16.31% (3.03%) 10.55% 8.14% 13.04%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)....................... $127,741 $132,577 $149,674 $135,404 $89,975
Ratio of expenses to average
net assets.................. 0.65% 0.65% 0.65% 0.63% 0.36%
Ratio of net investment
income to average net
assets...................... 6.32% 6.25% 6.32% 6.73% 7.51%
Ratio of expenses to average
net assets*................. 0.75% 1.05% 0.88% 0.76% 0.91%
Ratio of net investment
income to average net
assets*..................... 6.22% 5.85% 6.09% 6.60% 6.96%
Portfolio turnover........... 59.32% 50.00% 31.00% 52.00% 105.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on February 1, 1991, the
Portfolio issued a second series of shares which were designated as
"Trust" Shares. The financial highlights presented for periods prior to
February 1, 1991 represent financial highlights applicable to the Investor
Shares.
See notes to financial statements.
-92-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------------------------
1995 1994 (A) 1993 1992 1991
------------- ------------- -------- -------- --------
INSTITUTIONAL INSTITUTIONAL INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.64 $10.65 $10.26 $10.15 $ 9.71
------ ------ ------ ------ ------
Investment Activities
Net investment income.. 0.61 0.60 0.64 0.66 0.75
Net realized and
unrealized gains
(losses) from
investments........... 0.89 (0.94) 0.39 0.11 0.48
------ ------ ------ ------ ------
Total from Investment
Activities........... 1.50 (0.34) 1.03 0.77 1.23
------ ------ ------ ------ ------
Distributions
Net investment income.. (0.61) (0.60) (0.64) (0.66) (0.79)
In excess of net
realized gains........ (0.07)
------ ------ ------ ------ ------
Total Distributions... (0.61) (0.67) (0.64) (0.66) (0.79)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $10.53 $ 9.64 $10.65 $10.26 $10.15
====== ====== ====== ====== ======
Total Return............ 15.98% (3.32%) 10.23% 7.81% 12.79%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $9,413 $5,965 $3,737 $2,490 $2,010
Ratio of expenses to
average net assets..... 0.95% 0.96% 0.95% 0.93% 0.59%
Ratio of net investment
income to average net
assets................. 6.01% 6.03% 6.00% 6.45% 7.77%
Ratio of expenses to
average net assets*.... 1.05% 1.07% 1.05% 1.06% 1.14%
Ratio of net investment
income to average net
assets*................ 5.91% 5.92% 5.90% 6.32% 7.22%
Portfolio turnover...... 59.32% 50.00% 31.00% 52.00% 105.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on January 3, 1994, the
Portfolio issued a new series of shares designated as "Institutional"
Shares. The financial highlights presented for periods prior to January 3,
1994 represent financial highlights applicable to the Investor Shares.
See notes to financial statements.
-93-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------------------------
1995 1994 (A) 1993 1992 1991
---------- ---------- -------- -------- --------
INVESTOR A INVESTOR A INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $10.05 $11.20 $10.80 $10.68 $10.21
------ ------ ------ ------ ------
Investment Activities
Net investment income........ 0.64 0.63 0.59 0.62 0.75
Net realized and unrealized
gains (losses) from
investments................. 0.80 (0.97) 0.47 0.13 0.47
------ ------ ------ ------ ------
Total from Investment
Activities................. 1.44 (0.34) 1.06 0.75 1.22
------ ------ ------ ------ ------
Distributions
Net investment income........ (0.64) (0.63) (0.59) (0.62) (0.75)
Net realized gains........... (0.07) (0.01)
In excess of net realized
gains....................... (0.18)
------ ------ ------ ------ ------
Total Distributions......... (0.64) (0.81) (0.66) (0.63) (0.75)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD....................... $10.85 $10.05 $11.20 $10.80 $10.68
====== ====== ====== ====== ======
Total Return (excludes sales
charges)..................... 14.66% (3.14%) 10.03% 7.20% 12.36%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................ $8,179 $9,631 $9,567 $7,499 $5,791
Ratio of expenses to average
net assets................... 0.97% 0.96% 0.97% 0.95% 0.82%
Ratio of net investment income
to average net assets........ 6.05% 5.98% 5.25% 5.72% 7.12%
Ratio of expenses to average
net assets*.................. 1.07% 1.06% 1.08% 1.09% 1.36%
Ratio of net investment income
to average net assets*....... 5.95% 5.88% 5.14% 5.58% 6.58%
Portfolio turnover............ 93.76% 50.00% 24.00% 74.00% 36.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares and authorized the issuance of a series of shares
designated as "Investor B" Shares.
See notes to financial statements.
-94-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MARCH 1, 1995 TO
NOVEMBER 30,
1995 (A)
----------------
INVESTOR B
SHARES
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $10.34
------
Investment Activities
Net investment income......................................... 0.31
Net realized and unrealized gains from investments............ 0.50
------
Total from Investment Activities............................. 0.81
------
Distributions
Net investment income......................................... (0.31)
------
Total Distributions.......................................... (0.31)
------
NET ASSET VALUE, END OF PERIOD................................. $10.84
======
Total Return (excludes sales charges).......................... 12.85%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).............................. $ 41
Ratio of expenses to average net assets........................ 1.68%(c)
Ratio of net investment income to average net assets........... 5.37%(c)
Ratio of expenses to average net assets*....................... 1.78%(c)
Ratio of net investment income to average net assets*.......... 5.27%(c)
Portfolio turnover............................................. 93.76%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio redesignated the Investor Shares as "Investor A" Shares and
authorized the issuance of a series of shares designated as "Investor B"
Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements.
-95-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------------------
1995 1994 1993 1992 1991 (A)
------- ------- ------- ------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................... $ 10.05 $ 11.20 $ 10.80 $ 10.68 $ 10.42
------- ------- ------- ------- -------
Investment Activities
Net investment income........... 0.67 0.66 0.62 0.66 0.64
Net realized and unrealized
gains (losses) from
investments.................... 0.80 (0.97) 0.47 0.13 0.26
------- ------- ------- ------- -------
Total from Investment
Activities.................... 1.47 (0.31) 1.09 0.79 0.90
------- ------- ------- ------- -------
Distributions
Net investment income........... (0.67) (0.66) (0.62) (0.66) (0.64)
Net realized gains.............. (0.07) (0.01)
In excess of net realized gains. (0.18)
------- ------- ------- ------- -------
Total Distributions............ (0.67) (0.84) (0.69) (0.67) (0.64)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 10.85 $ 10.05 $ 11.20 $ 10.80 $ 10.68
======= ======= ======= ======= =======
Total Return..................... 15.00% (2.85%) 10.36% 7.52% 12.62%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................... $45,513 $33,166 $35,121 $31,106 $21,484
Ratio of expenses to average net
assets.......................... 0.67% 0.66% 0.67% 0.65% 0.56%
Ratio of net investment income to
average net assets.............. 6.36% 6.25% 5.57% 6.02% 7.26%
Ratio of expenses to average net
assets*......................... 0.77% 1.06% 0.91% 0.79% 1.11%
Ratio of net investment income to
average net assets*............. 6.26% 5.85% 5.33% 5.88% 6.71%
Portfolio turnover............... 93.76% 50.00% 24.00% 74.00% 36.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on February 1, 1991, the
Portfolio issued a second series of shares which were designated as
"Trust" Shares. The financial highlights presented for periods prior to
February 1, 1991 represent financial highlights applicable to the Investor
Shares.
See notes to financial statements.
-96-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------------------------
1995 1994 (A) 1993 1992 1991
------------- ------------- -------- -------- --------
INSTITUTIONAL INSTITUTIONAL INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.02 $11.20 $10.80 $10.68 $10.21
------ ------ ------ ------ ------
Investment Activities
Net investment income.. 0.63 0.61 0.59 0.62 0.75
Net realized and
unrealized gains
(losses) from
investments 0.80 (1.00) 0.47 0.13 0.47
------ ------ ------ ------ ------
Total from Investment
Activities........... 1.43 (0.39) 1.06 0.75 1.22
------ ------ ------ ------ ------
Distributions
Net investment income.. (0.63) (0.61) (0.59) (0.62) (0.75)
Net realized gains..... (0.07) (0.01)
In excess of net
realized gains........ (0.18)
------ ------ ------ ------ ------
Total Distributions... (0.63) (0.79) (0.66) (0.63) 0.75)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $10.82 $10.02 $11.20 $10.80 $10.68
====== ====== ====== ====== ======
Total Return............ 14.69% (3.46%) 10.03% 7.20% 12.36%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $ 667 $ 51 $9,567 $7,499 $5,791
Ratio of expenses to
average net assets..... 0.97% 0.95% 0.97% 0.95% 0.82%
Ratio of net investment
income to average net
assets................. 5.91% 6.54% 5.25% 5.72% 7.12%
Ratio of expenses to
average net assets*.... 1.07% 1.16% 1.08% 1.09% 1.36%
Ratio of net investment
income to average net
assets*................ 5.81% 6.33% 5.14% 5.58% 6.58%
Portfolio turnover...... 93.76% 50.00% 24.00% 74.00% 36.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on June 7, 1994, the Portfolio
issued a new series of shares designated as "Institutional" Shares. The
financial highlights presented for periods prior to June 7, 1994 represent
financial highlights applicable to the Investor Shares.
See notes to financial statements.
-97-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, -------------------------------------------------
1995 (E) 1995 (A) 1994 1993 1992 1991 (B)
---------------- ---------- -------- -------- -------- --------
INVESTOR A INVESTOR A INVESTOR INVESTOR INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.52 $ 11.13 $ 11.54 $ 10.97 $ 10.62 $10.35
------- ------- ------- ------- ------- ------
Investment Activities
Net investment income.. 0.27 0.55 0.55 0.58 0.63 0.44
Net realized and
unrealized gains
(losses) on
investments........... 0.22 0.40 (0.37) 0.64 0.43 0.36
------- ------- ------- ------- ------- ------
Total from Investment
Activities........... 0.49 0.95 0.18 1.22 1.06 0.80
------- ------- ------- ------- ------- ------
Distributions
Net investment income.. (0.27) (0.55) (0.55) (0.58) (0.63) (0.44)
Net realized gains..... (0.01) (0.04) (0.07) (0.08) (0.09)
------- ------- ------- ------- ------- ------
Total Distributions... (0.27) (0.56) (0.59) (0.65) (0.71) (0.53)
------- ------- ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97 $10.62
======= ======= ======= ======= ======= ======
Total Return (excludes
sales charges)......... 4.32%(c) 8.91% 1.53% 11.47% 10.24% 8.72%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $24,726 $24,318 $27,919 $23,223 $12,635 $6,211
Ratio of expenses to
average net assets..... 0.95%(d) 0.84% 0.65% 0.63% 0.85% 0.85%(d)
Ratio of net investment
income to average net
assets................. 4.64%(d) 5.02% 4.75% 5.11% 5.75% 6.12%(d)
Ratio of expenses to
average net assets*.... 1.18%(d) 1.18% 1.12% 1.18% 1.49% 1.63%(d)
Ratio of net investment
income to average net
assets*................ 4.44%(d) 4.68% 4.28% 4.56% 5.11% 5.34%(d)
Portfolio turnover...... 1.55% 0.00% 20.00% 15.00% 21.00% 71.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated Investor shares as
"Investor A" shares and authorized the issuance of a third series of
shares designated as "Investor B" shares.
(b) On September 28, 1990, the Portfolio issued a second series of shares and
designated such shares as "Investor" shares. These financial highlights
represent the period from September 28, 1990 through May 31, 1991.
(c) Not annualized.
(d) Annualized.
(e) Upon merging into the Arch Fund, Inc., the Missouri Tax-Exempt Bond
Portfolio changed its fiscal year end from May 31 to November 30.
See notes to financial statements.
-98-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 1, 1995 TO
NOVEMBER 30, MAY 31, 1995
1995 (E) 1995 (A)
---------------- ----------------
INVESTOR B INVESTOR B
SHARES SHARES
---------------- ----------------
<S> <C> <C>
Net Asset Value, Beginning of Period......... $11.52 $11.19
------ ------
Investment Activities
Net investment income....................... 0.22 0.11
Net realized and unrealized gains on
investments................................ 0.22 0.33
------ ------
Total from Investment Activities........... 0.44 0.44
------ ------
Distributions
Net investment income....................... (0.22) (0.11)
------ ------
Total Distributions........................ (0.22) (0.11)
------ ------
NET ASSET VALUE, END OF PERIOD............... $11.74 $11.52
====== ======
Total Return (excludes sales charges)........ 3.88%(c) 8.61%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000)............ $ 433 $ 94
Ratio of expenses to average net assets...... 1.77%(d) 1.76%(d)
Ratio of net investment income to average net
assets...................................... 3.82%(d) 4.00%(d)
Ratio of expenses to average net assets*..... 1.87%(d) 1.88%(d)
Ratio of net investment income to average net
assets*..................................... 3.72%(d) 3.89%(d)
Portfolio turnover........................... 1.55% 0.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated Investor shares as
"Investor A" shares and authorized the issuance of a third series of
shares designated as "Investor B" shares. These financial highlights of
Investor B shares cover the period from March 1, 1995 (commencement of
operations) through May 31, 1995.
(b) Represents total return for the Investor A Shares from June 1, 1994 to
February 28, 1995, plus the total return for the Investor B Shares for the
period from March 1, 1995 to May 31, 1995.
(c) Not annualized.
(d) Annualized.
(e) Upon merging into the Arch Fund, Inc., the Missouri Tax-Exempt Bond
Portfolio changed its fiscal year end from May 31 to November 30.
See notes to financial statements.
-99-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MAY 31,
NOVEMBER 30, -----------------------------------------
1995 (C) 1995 1994 1993 1992 1991
---------------- ------- ------- ------- ------ ------
TRUST TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES SHARES
---------------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.52 $ 11.13 $ 11.54 $ 10.97 $10.62 $10.50
------- ------- ------- ------- ------ ------
Investment Activities
Net investment income.. 0.28 0.57 0.58 0.60 0.64 0.67
Net realized and
unrealized gains
(losses) on
investments.......... 0.22 0.40 (0.37) 0.64 0.43 0.24
------- ------- ------- ------- ------ ------
Total from Investment
Activities............. 0.50 0.97 0.21 1.24 1.07 0.91
------- ------- ------- ------- ------ ------
Distributions
Net investment income.. (0.28) (0.57) (0.58) (0.60) (0.64) (0.70)
Net realized gains..... (0.01) (0.04) (0.07) (0.08) (0.09)
------- ------- ------- ------- ------ ------
Total Distributions... (0.28) (0.58) (0.62) (0.67) (0.72) (0.79)
------- ------- ------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 11.74 $ 11.52 $ 11.13 $ 11.54 $10.97 $10.62
======= ======= ======= ======= ====== ======
Total Return............ 4.41%(a) 9.12% 1.73% 11.70% 10.37% 9.08%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $47,773 $44,336 $47,743 $32,777 $6,609 $4,735
Ratio of expenses to
average net assets..... 0.78%(b) 0.64% 0.45% 0.43% 0.73% 0.70%
Ratio of net investment
income to average net
assets................. 4.83%(b) 5.22% 4.96% 5.30% 5.87% 6.37%
Ratio of expenses to
average net assets*.... 0.88%(b) 1.16% 1.13% 0.98% 1.38% 1.66%
Ratio of net investment
income to average net
assets*................ 4.73%(b) 4.70% 4.28% 4.75% 5.22% 5.41%
Portfolio turnover...... 1.55% 0.00% 20.00% 15.00% 21.00% 71.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Upon merging into the Arch Fund, Inc., the Missouri Tax-Exempt Bond
Portfolio changed its fiscal year end from May 31 to November 30.
See notes to financial statements.
-100-
<PAGE>
THE ARCH FUND, INC.
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
MUNICIPAL PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO
------------------- -------------------------------------
JULY 10, 1995 TO YEAR ENDED APRIL 4, 1994
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 (A) 1995 1994 (A)(B)(C)
------------------- --------------- ----------------
INVESTOR A INVESTOR A INVESTOR A
SHARES SHARES SHARES
------------------- --------------- ----------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................ $10.00 $ 9.90 $ 10.00
------ --------------- ---------------
Investment Activities
Net investment income
(loss).................. 0.02 (0.01)
Net realized and
unrealized gains
(losses) from
investments and foreign
currency................ 0.08 0.86 (0.09)
------ --------------- ---------------
Total from Investment
Activities............. 0.08 0.88 (0.10)
------ --------------- ---------------
Distributions
Net realized gains....... (0.01)
Tax return of capital.... (0.01)
------ --------------- ---------------
Total Distributions..... (0.02)
------ --------------- ---------------
NET ASSET VALUE, END OF
PERIOD................... $10.08 $ 10.76 $ 9.90
====== =============== ===============
Total Return (excludes
sales charges)........... 0.80%(d) 8.89% (1.00%)(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of
period (000)............. $ (f) $ 1,568 $ 791
Ratio of expenses to
average net assets....... 0.00%(e) 1.45% 1.55%(e)
Ratio of net investment
income (loss) to average
net asset................ 0.00%(e) 0.07% (0.39%)(e)
Ratio of expenses to
average net assets*...... 0.00%(e) 1.76% 1.89%(e)
Ratio of net investment
loss to average net
assets*.................. 0.00%(e) (0.24%) (0.73%)(e)
Portfolio turnover........ 0.00% 62.78% 21.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) On April 4, 1994, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on May 2, 1994, the Portfolio
issued a new series of shares which were designated as "Investor" Shares.
The financial highlights presented for April 4, 1994 to May 2, 1994
represent financial highlights applicable to the Trust Shares.
(c) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of Shares
designated as "Investor B" Shares.
(d) Not annualized.
(e) Annualized.
(f) Only one Investor A Share, worth $10.08, was outstanding as of November
30, 1995.
See notes to financial statements.
-101-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MARCH 1, 1995
TO NOVEMBER 30,
1995 (A)
---------------
INVESTOR B
SHARES
---------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 9.26
------
Investment Activities
Net investment loss........................................... (0.03)
Net realized and unrealized gains from investments and foreign
currency..................................................... 1.48
------
Total from Investment Activities............................. 1.45
------
NET ASSET VALUE, END OF PERIOD................................. $10.71
======
Total Return (excludes sales charges).......................... 8.38%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).............................. $ 102
Ratio of expenses to average net assets........................ 2.02%(c)
Ratio of net investment loss to average net assets............. (0.96%)(c)
Ratio of expenses to average net assets*....................... 2.44%(c)
Ratio of net investment loss to average net assets*............ (1.38%)(c)
Portfolio turnover............................................. 62.78%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995, plus the total return for the Investor B Shares for the
period from March 1, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements.
-102-
<PAGE>
THE ARCH FUND, INC.
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
MUNICIPAL PORTFOLIO INTERNATIONAL EQUITY PORTFOLIO
------------------- ------------------------------------
JULY 10, 1995 TO YEAR ENDED APRIL 4, 1994
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 (A) 1995 1994 (A)
------------------- --------------- ----------------
TRUST TRUST TRUST
SHARES SHARES SHARES
------------------- --------------- ----------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................ $ 10.00 $ 9.92 $ 10.00
------- --------------- ---------------
Investment Activities
Net investment income.... 0.14 0.03 0.01
Net realized and
unrealized gains
(losses) from
investments and foreign
currency................ 0.07 0.86 (0.09)
------- --------------- ---------------
Total from Investment
Activities............. 0.21 0.89 (0.08)
------- --------------- ---------------
Distributions
Net investment income.... (0.14)
Net realized gains....... (0.01)
Tax return of capital.... (0.01)
------- --------------- ---------------
Total Distributions..... (0.14) (0.02)
------- --------------- ---------------
NET ASSET VALUE, END OF
PERIOD................... $ 10.07 $ 10.79 $ 9.92
======= =============== ===============
Total Return.............. 2.15%(b) 8.97% (0.80%)(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of
period (000)............. $23,754 $ 36,096 $ 23,746
Ratio of expenses to
average net assets....... 0.47%(c) 1.16% 1.23%(c)
Ratio of net investment
income to average net
assets................... 3.81%(c) 0.39% 0.23%(c)
Ratio of expenses to
average net assets*...... 1.12%(c) 1.46% 1.95%(c)
Ratio of net investment
income (loss) to average
net assets*.............. 3.16%(c) 0.09% (0.49%)(c)
Portfolio turnover........ 0.00% 62.78% 21.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-103-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 4, 1994
NOVEMBER 30, TO NOVEMBER 30,
1995 1994 (A)
------------- ---------------
INSTITUTIONAL INSTITUTIONAL
SHARES SHARES
------------- ---------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 9.90 $10.00
------ ------
Investment Activities
Net investment income (loss).................... 0.01 (0.01)
Net realized and unrealized gains (losses) from
investments and foreign currency............... 0.86 (0.09)
------ ------
Total from Investment Activities............... 0.87 (0.10)
------ ------
Distributions
Realized net gains.............................. (0.01)
Tax return of capital........................... (0.01)
------ ------
Total Distributions............................ (0.02)
------ ------
NET ASSET VALUE, END OF PERIOD................... $10.75 $ 9.90
====== ======
Total Return..................................... 8.78% (1.00%)(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000)................ $2,159 $ 197
Ratio of expenses to average net assets.......... 1.44% 1.70%(c)
Ratio of net investment income (loss) to average
net assets...................................... 0.13% (0.48%)(c)
Ratio of expenses to average net assets*......... 1.75% 2.17%(c)
Ratio of net investment loss to average net
assets*......................................... (0.18%) (0.94%)(c)
Portfolio turnover............................... 62.78% 21.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On April 4, 1994, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on April 24, 1994, the
Portfolio issued a new series of shares which were designated as
"Institutional" Shares. The financial highlights presented for April 4,
1994 to April 24, 1994 represent financial highlights applicable to the
Trust Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-104-
<PAGE>
The ARCH Fund(R), Inc.
Money Market Portfolio Emerging Growth Portfolio Missouri Tax-Exempt
Balanced Portfolio Bond Portfolio
Treasury Money Market
Portfolio Government & Corporate Short-Intermediate
Bond Portfolio Municipal Portfolio
Tax-Exempt Money Market
Portfolio U.S. Government Securities International Equity
Portfolio Portfolio
Growth & Income Equity
Portfolio
[LOGO]
ARCH
MUTUAL FUNDS
ANNUAL REPORT
November 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT ADVISER DISTRIBUTOR LEGAL COUNSEL
Mississippi Valley Advisors Inc. BISYS Fund Services Drinker Biddle & Reath
One Mercantile Center 3435 Stelzer Road Philadelphia National Bank
Seventh & Washington Streets Columbus, OH 43219-3035 Building 1345 Chestnut
St. Louis, Missouri 63101 Street Philadelphia,
Pennsylvania 19107-3496
</TABLE>
AUDITORS TRANSFER AGENT
KPMG Peat Marwick LLP BISYS Fund Services Ohio, Inc.
Two Nationwide Plaza 3435 Stelzer Road Columbus, OH
Columbus, Ohio 43215 43219-3035
This report is submitted for the general information of the shareholders of
The ARCH Fund, Inc. It is not authorized for distribution to prospective
investors unless accompanied or preceded by an effective Prospectus for the
Fund, which contains information concerning the Fund's investment policies and
expenses as well as other pertinent information.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 071
<NAME> THE ARCH BALANCED PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> NOV-30-1994
<PERIOD-END> NOV-30-1995
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<NAME> THE ARCH BALANCED PORTFOLIO
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<NAME> THE ARCH BALANCED PORTFOLIO
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<NAME> THE ARCH BALANCED PORTFOLIO
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<PAGE>
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<NAME> THE ARCH EMERGING GROWTH PORTFOLIO
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<NAME> THE ARCH EMERGING GROWTH PORTFOLIO
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<NAME> THE ARCH EMERGING GROWTH PORTFOLIO
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<NAME> THE ARCH EMERGING GROWTH PORTFOLIO
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<NAME> THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
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<NAME> THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
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<NAME> THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
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<NAME> THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
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<NAME> THE ARCH GOVERNMENT SECURITIES PORTFOLIO
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<NAME> THE ARCH GOVERNMENT SECURITIES PORTFOLIO
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<NAME> THE ARCH GOVERNMENT SECURITIES PORTFOLIO
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<NAME> THE ARCH GOVERNMENT SECURITIES PORTFOLIO
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<NAME> THE ARCH GROWTH & INCOME EQUITY PORTFOLIO
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<NAME> THE ARCH GROWTH & INCOME EQUITY PORTFOLIO
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<NAME> THE ARCH INTERNATIONAL PORTFOLIO
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<NAME> THE ARCH INTERNATIONAL PORTFOLIO
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<NAME> THE ARCH INTERNATIONAL PORTFOLIO
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<NAME> THE ARCH INTERNATIONAL PORTFOLIO
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<NAME> THE ARCH MONEY MARKET PORTFOLIO
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<NAME> THE ARCH MONEY MARKET PORTFOLIO
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<NAME> THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO
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<NAME> THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO
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<NAME> THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO
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<NAME> THE ARCH SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
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<NAME> THE ARCH SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
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<NAME> THE ARCH TAX-EXEMPT MONEY MARKET PORTFOLIO
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<NAME> THE ARCH TREASURY MONEY MARKET PORTFOLIO
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<NAME> THE ARCH TREASURY MONEY MARKET PORTFOLIO
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<NAME> THE ARCH TREASURY MONEY MARKET PORTFOLIO
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